Windows SA failover DR benefit

If you have a server participating in a cluster, it will have to be licensed, I believe.

"Ideally what i would have is a server with hyper-v replicas syncing to it that i can turn on if anything happens to my cluster and all i need to do is change DFS and DNS to redirect users to these."
This raises questions with me.  Am I correct thinking you have a 3-node cluster already, hosting one or more VMs?  And this additional host would be a cold standby for that cluster?

Yes. So my 3 cluster machines are licensed and run about 50 vms.

About 6 of these are business critical. I want to replicate them to another machine or have failover copies of them for instances like SQL (which i know i am licensed for for failover) however i wanted to check if the standby machine is licensed as its only to be used in a DR situation.

Don't you have a backup setup that deals with maintaining copied/backups of Dbs or systems just for such an occurrence?
The system as noted earlier will have to be licensed for the windows server side since it is "functional" while in standby/fail-over status
The SQL server license transitions from the active to the failover while the reverse happens with the other.

Much depends on the version of your SQL server version, but newer, since 2012 the Allways On option was available and perhaps that is what you are looking for. Though the licensing will likely mean that your DR SQL instance will need to be licensed appropriately as it does not have a standby/failover in this scenario it will be functional as a read-only instance of the DB and can be used to offload the backup load, possible reporting tasks, etc from hitting the primary, read-write instance.

"i wanted to check if the standby machine is licensed as its only to be used in a DR situation."
I still don't think so.  
This DR server would be in a different physical location?  I wonder if you've considered Azure or AWS for a DR site.  The cost of licensing would be rolled up in the monthly bill and save you from having to build/license a physical machine.  I don't work for Azure or AWS, but we do have an Azure DR site and it works pretty well for our needs.

Another follow-up question:  Can all your VMs can migrate between all your hosts?

We do have Azure Recovery Services to replicate to Azure for a full building DR.

However I am looking to provide local redundancy (1 site) for just my hyper-v cluster. As if that dies all my VMs go down but the site is still up.

I want to replicate data to the failover machine using hyper-v replica along with a copy of SQL (I know i am supported for failover SQL mirror / basic AG with SA) which will then take over as primary in the event that the hyper-v cluster had issues. I just wasnt sure if i was allowed to use a host for DR without a license using the SA benefit.

Cold Backups for Disaster Recovery
Be prepared with complimentary “cold” backup server licenses for
disaster recovery. To qualify for this Software Assurance benefit,
you must have a Microsoft server license and all corresponding Client Access Licenses (CALs)—if required by the software—enrolled
in active Software Assurance.

I think i can use one however the machine cannot be turned on unless in a DR or testing scenario. So that would leave me back at licensing a machine. However Could i license the host OS with standard rather than enterprise edition. This would allow me to run 2 VMs all the other replicas would be covered by my DC Software Assurance as they are essentially "Cold" as the VMs arent turned on?

Software Assurance has "Cold-Standby" rights.

https://download.microsoft.com/download/6/C/5/6C576C0C-F740-48E2-86E1-25B15BE23879/dr_brief.doc

Reading the MS january 2020 documentation it says

Additional Permitted Use of Windows Server
•      Other than backup instances run on Microsoft Azure Services, Windows Server License is not required for the disaster recovery Server if the following conditions are met:
•      The Hyper-V role within Windows Server is used to replicate Virtual OSEs from the production Server at a primary site to a disaster recovery Server.
•      The disaster recovery Server may be used only to
- run hardware virtualization software, such as Hyper-V,
- provide hardware virtualization services,
- run software agents to manage the hardware virtualization software,
- serve as a destination for replication,
- receive replicated Virtual OSEs, test failover,
- await failover of the Virtual OSEs, and
- run disaster recovery workloads as described above.
•      The disaster recovery Server may not be used as a production Server.

So would i be right in thinking that I can run Windows Server on a physical machine without a separate license if it only receives Hyper-V replicas from my production servers and the replicas are only for DR situations?