If you go through the pains of architecting your system to span multiple AZs, or you avoid using EBS, then you probably dodge most of the EC2 outages. (Remains to be seen if that is the case here.)

That said, I don't think most people think using the cloud means that downtime is a thing of the past. I think the more attractive proposition is when hardware breaks, or meteors hit the datacenter, etc, it is their problem, not yours. You still have to deal with software-level operations, but hardware-level operations is effectively outsourced. The question is if you think you can do a better job than Amazon -- some companies think they can, most startups know they can't.

Yeah. Even with this, they still do better than I would. My record: misconfigured air-conditioning unit alarm leading to servers being baked at high temperature over a weekend, leading to much wailing and gnashing of teeth. I now know to be really careful to set up air conditioning units properly, but what other lessons am I still waiting to learn? The main lesson that I took from this is that I should stick to what I am good at: cutting code & chewing data. :-)

Yeah this is another important point. Part of the cost of AWS is also a bit of an insurance policy against you physically breaking your servers :)

I always understood the cloud to mean a black box of sorts that automatically handles failover, among other things. The cloud being just a fuzzy representation of the infrastructure.

S3 probably fits the description of a cloud service. You send your data, and the service worries about making it redundant without your intervention. If data in NE USA is unavailable, the service will automatically serve you the data from somewhere else. You don't need to know how it works.

EC2 and some of these other building blocks, however, I would not consider to be cloud services. Merely tools for building out your own cloud services to other customers who then shouldn't have to think about failover and other such concerns.

If you know you are using a server that is physically located in a certain geographic location, it need not be represented by a cloud. It is a distinct point on the network.