Hello @Diqing Wu ,
Please see my answers below:
1) Can Azure automatically automatic allocate new disks for VM?
No.
2) If yes, is there an option or settings on Azure portal allow us to set up critical usage line, so if line got crossed Azure will automatically allocate new disks for VM?
My answer is no for the single standing VM. Azure Portal doesn't have the option to automatically create, attach, initialize data disks or resize the OS disk based on the utilization. Please keep in mind, you can resize/scale up the Azure VM size using Automation runbooks and VM metrics.
3) Disks deletion was recommended by Azure CloudFit, when they make recommendation did they considered this situation?
I'd contact CloudFit again and double check it if you still have concerns.
I really do want to make sure how this is working, because I’m worried that the disk I delete will be generate again by Azure.
I understand your concerns. No, disk will not be recreated by the Azure unless you set up some additional 3rd party automation to do it.
(If the reply was helpful please don't forget to upvote and/or accept as answer, thank you)
Sincerely,
Olga