What are Reserved Instances in AWS?

Reserved Instances in AWS refer specifically to billing discounts that customers receive when they commit to using Amazon EC2 instances for a one- or three-year term. This offering provides significant savings compared to on-demand pricing, especially for applications with steady state usage, as it allows customers to reserve capacity and reduce costs over the long term.

By committing to a certain level of usage, customers can plan their expenses more predictably and take advantage of reduced hourly rates for their instances. This is particularly beneficial for workloads that require consistent computing power and for businesses looking to manage their cloud spending efficiently.

The other options do not accurately reflect the nature of Reserved Instances. Discounted rates for monitoring services do not pertain to the EC2 instance commitments, while pay-as-you-go pricing relates to other services without the commitment aspect needed for Reserved Instances. Additionally, unlimited use of S3 resources does not describe Reserved Instances, as S3 pricing is based on storage and data transfer rather than instance usage.