Windows Azure Websites offers the ability to have smaller deployed websites. The ability to have multiple roles on a single VM instance is still in planning.
An error occurred while saving the commentJoe Wood commented
Agreed. A sandbox model (app domain) would suffice for 'safe code'. Using this we could support dynamic deployments and on-demand scaling.
Good feedback. No plans in this area, yet.
This work is on our backlog and currently under consideration. We will update here if this changes.