Automated Fabric workspace creation in the insights branch does not work because the Microsoft.Fabric/workspaces ARM resource type is not available in the current Azure CLI or subscription/region. The error Resource type workspaces not found. is returned when attempting to create the workspace via az resource create. This is a platform limitation, not a script bug.
Workaround:
Until Microsoft enables full ARM/CLI support for Fabric workspaces, users must create the workspace manually in the Azure Portal. The rest of the AIO integration will work once the workspace exists.