Support for virtual applications was added in recent updates of Azure Web Sites. This is very useful when you have a website which need to expose different applications as a subfolders. For example:
- / - root
- /blog - blog platform application
- /commerce - e-commerce
This makes transition to Azure websites very easy for this type of applications:.
To enable it navigate to configure website in azure management portal. Navigate to Configure website tab:

And then at the bottom of the page Virtual application section can be seen:

Hit save and the app is good to go.