Guest configuration extension should be installed on your machines

Description: 

According to Microsoft:

Azure Policy can audit settings inside a machine, both for machines running in Azure and Arc Connected Machines. The validation is performed by the Guest Configuration extension and client. The extension, through the client, validates settings such as:

• The configuration of the operating system

• Application configuration or presence

• Environment settings

At this time, most Azure Policy Guest Configuration policy definitions only audit settings inside the machine. They don't apply configurations.

Solution/Reference: 

Please learn more about how to configure this extension here:

https://docs.microsoft.com/en-us/azure/governance/policy/concepts/guest-configuration