The required configuration is achieved by first enabling Microsoft Defender for Storage at the subscription level, which ensures all resources within, including storage1 and storage2, are covered. Then, to meet the exclusion requirement, you must perform two actions on storage3: disable the plan specifically for that storage account and apply a tag to prevent it from being automatically re-enabled by subscription-level policies.

1. Enable the Defender for Storage plan for Sub1: This is the first and most critical step. Defender for Cloud plans are enabled at the subscription level to provide broad protection and centralized management. This action ensures that protection is applied to storage1 and storage2 in RG1.
2. Disable Defender for Storage for storage3: After enabling the plan for the subscription, it will automatically apply to all storage accounts, including storage3. To meet the requirement, you must explicitly override this setting at the resource level by disabling the plan on the storage3 account itself.
3. For storage3, assign the AzDefenderPlanAutoEnable tag and set the value to off: This final step ensures the exclusion is persistent. This tag prevents Microsoft Defender for Cloud's auto-provisioning feature from re-enabling protection on storage3 in the future, thus locking in the desired exclusion.

The other options are incorrect. Disabling customer-managed keys is irrelevant as Defender for Storage supports them. Enabling protection only for RG1 is not the standard practice, as plans are managed at the subscription level.

Microsoft Docs: Enable Microsoft Defender for Storage. This document outlines the process for enabling Defender for Storage, stating, "You can configure Microsoft Defender for Storage on your subscriptions..." which confirms that the plan is managed at the subscription level.

Microsoft Docs: Configure Microsoft Defender for Storage at the per-account level. This source explains how to override subscription-level settings. It states, "If you want to disable Defender for Storage on specific storage accounts, you can configure individual storage accounts to override the subscription settings." This validates the second step of disabling the plan for storage3.

Microsoft Docs: Prevent your resources from being automatically provisioned for Microsoft Defender for Cloud. This reference explains the use of tags for exclusion, specifically mentioning: "To prevent auto-provisioning on specific resources, you can add a tag to the specific resource... Tag name: AzDefenderPlanAutoEnable, Tag value: off." This supports the third step in the sequence.