Thanks for the question hspinto!
Azure Deployment Environments empowers development teams to self-serve app infrastructure (PaaS, Serverless, etc.), using curated ‘infra-as-code’ templates. Based on the current stage of development, developers can spin up different types of environments such as sandbox, dev, test, staging, pre-prod, and prod. Deployment Environments service is complimentary to enterprise scale landing zones and enables dev infra teams to pre-configure the subscriptions in which different types of environments are created and thereby, enforcing appropriate policies.
Azure DevTest Labs is also a cloud service that enables development teams to self-serve infrastructure but its pre-dominantly focused on IaaS virtual machines (VM’s). Most of the capabilities around advanced configuration and cost control are focused on virtual machines. While DevTest Labs provides basic capabilities to spin up PaaS resources using ARM templates, all the resources are created in the same subscription which limits usage to dev or test scenarios.