Sometimes the simplest things becomes difficult to understand just because you are not using it much, and that was the case for Policy and Initiative for me.
Azure Policy is a service you use to create, assign, and manage policies. These policies apply and enforce rules that your resources need to follow. These policies can enforce these rules when resources are created, and can be evaluated against existing resources to give visibility into compliance.
An Initiative is a collection of policy definitions that are tailored towards achieving a singular overarching goal. Initiative definitions simplify managing and assigning policy definitions.
Policy is a single rule and when we need to implement multiple rules for a single resource or set of resources create all the policies and then attach them to a single initiative. Using this Initiative we can multiple policies and add another policy to a already created Initiative thus helping in administration.
As you can see above we added multiple policies to a single Initiative the next step is going to assign this Initiative to an Azure Object.
I hope it helps!