The rule "Malicious IP Address Sign-In Failure Rate" is designed to detect sign-in attempts to a system or application that originate from IP addresses identified as malicious, particularly through a high number of failed attempts. The detection mechanism relies on monitoring risk events categorized as 'maliciousIPAddress' within the Azure environment, specifically under the risk detection service. The rule flags accounts exhibiting unusual behavior, suggesting an attempt to compromise accounts by leveraging malicious sources. By tracking failed sign-ins linked to flagged IPs, organizations can be alerted to potential attacks and take necessary actions to protect accounts before a successful breach occurs. It is important for investigators to contextualize any flagged sessions within the user's broader sign-in activity to discern false positives effectively.