Dedicated Instances are mostly used by organizations that need dedicated hardware for security, compliance, or company policies. They do not want to share the physical server with other AWS customers.
Capacity Reservation is used to make sure the required EC2 capacity is available whenever we need it, especially during high-demand situations.
Among the Reserved Instance payment options, All Upfront gives the highest discount because the full amount is paid in advance.
Reserved Instances are a better option for long-term workloads. Instead of paying the normal On-Demand price every time, we can reserve the instance and reduce the overall cost.
On-Demand Instance is useful when we need an EC2 instance immediately. It is a good choice for temporary or unpredictable workloads because we pay only for what we use.