Azure ARM template vs Desired state configuration

It's not really one-or-the-other type of deal, even though it might seem like that on the surface. In short the main difference comes from resource provisioning versus desired state management. While you could use a custom image to set things up, there's a chance that later down the road you'll experience some configuration drift for a multitude of reasons, and this is where the dynamic nature of AASC and DSC would come in play.

For more info you can refer to https://learn.microsoft.com/en-us/azure/automation/automation-dsc-overview