This is long overdue. You can read about it here. Thanks to Geva Perry to spotting this announcement. This is very cool. This lets people use a cloud hosting service in a much more intuitive way. Lets look at a basic system. You might have an LDAP service and then have a tomcat based service also and a mysql service. A working system is at least three virtual machines (I know it could be combined but work with me here). This means three systems are permanently running. I may add virtual machines to the LDAP and WEB services based on load. A front end HTTP sprayer is another machine which may be permanent.
Amazon made me pay per hour for these before. Now, I can pay a fixed fee per year at a big discount for these virtual machines which I must run 24/7. The on demand instances which I start based on load, I'm happy to pay per hour. As the site grows then the administrator can start to add additional reserved instances when the 'off peak' load grows to where thats cost effective. This pattern continues.
This allows pretty big savings on costs for people deploying to EC2.
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