Explanation: Amazon EC2 provides virtual computing environments known as instances. When you launch an instance, the instance type that you specify determines the hardware of the host computer used for your instance. Each instance type offers different compute, memory, and storage capabilities and are grouped in instance families based on these capabilities. Select an instance type based on the re-quirements of the application or software that you plan to run on your instance. Reference: http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/concepts.html