Disclaimer - I have never tested Duplicati for doing Hyper-V backups - I didn’t even know it could.
But I may be able to answer your question from a more generalized backup point of view, as I have experience with other backup products and Hyper-V (Commvault, DPM, Backup Exec, Veeam, etc).
If you protect the VHD files directly, you will be getting crash-consistent copies of those hard disks. You will not back up VM configurations themselves. And as you pointed out, if the VHD files moved your backups would need to be reconfigured. If you had a server failure you’d have to configure Hyper-V, recreate the VMs, and then attach the restored VHD disks to the VMs.
If you are working with a Hyper-V-aware backup product, it’s almost always better to select the VMs themselves from the Hyper-V selection tree in the backup program. This will ensure all associated data for the VM is backed up: its configuration, VHD files (where ever they may be located), etc. Also the disks can be backed up in an application-consistent state instead of just crash-consistent (think of a clean shutdown vs dirty shutdown).
No idea if Duplicati can interface with Hyper-V in a way to actually achieve application-consistent backups. Would be cool if it were the case.