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What is Amazon EC2 and what does it provide to users needing virtual compute capacity? What are the main EC2 instance families, and how do you choose the right one for a specific workload? What is the difference between EBS backed and instance store backed EC2 instances in terms of data persistence? How do EC2 placement groups help optimize instance performance for specific networking or availability requirements? How does EC2 Nitro System architecture improve performance, security, and efficiency compared to older EC2 hypervisor based virtualization? How should an organization design a comprehensive EC2 rightsizing and cost optimization strategy combining instance type selection, pricing models, and automation?
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What is the difference between On Demand, Reserved, and Spot Instance pricing models in EC2?

Intermediate

Answer

On Demand pricing lets you pay for compute capacity by the hour or second with no long term commitment, offering maximum flexibility at the highest per hour rate, Reserved Instances require a one or three year commitment in exchange for a significant discount compared to On Demand pricing, and Spot Instances let you bid on spare, unused EC2 capacity at a steep discount, with the tradeoff that AWS can reclaim that capacity with only a short notice if it is needed elsewhere.
aws ec2 describe-spot-price-history --instance-types m5.large --product-descriptions 'Linux/UNIX'
Real-world example A company runs its steady, predictable production web servers using Reserved Instances for cost savings, while running its fault tolerant, interruptible batch processing jobs on Spot Instances to further reduce costs for that specific workload.

Common follow-ups: How much warning does AWS provide before reclaiming a Spot Instance?;What is the difference between Reserved Instances and Savings Plans?

AWS Cost Management & Billing;Auto Scaling Groups
All 7 EC2 & Compute questions