Selecting the correct size for a virtual machine is critical as it defines the amount of computing resources such as CPU, memory, and storage the virtual machine will have. The size determines the performance characteristics of the VM and affects the cost. Specifying the region is also important, but this choice does not by itself ensure the VM has the capacity to run specific applications; it mainly affects data sovereignty and latency. While resource groups, storage accounts, and virtual networks are critical components for organizing and providing services to a VM, they do not define its compute capacity.