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 requirements of the application or software that you plan to run on your instance.
Amazon EC2 provides each instance with a consistent and predictable amount of CPU capacity, regardless of its underlying hardware.
Amazon EC2 dedicates some resources of the host computer, such as CPU, memory, and instance storage, to a particular instance. Amazon EC2 shares other resources of the host computer, such as the network and the disk subsystem, among instances. If each instance on a host computer tries to use as much of one of these shared resources as possible, each receives an equal share of that resource. However, when a resource is underused, an instance can consume a higher share of that resource while it's available.
Each instance type provides higher or lower minimum performance from a shared resource. For example, instance types with high I/O performance have a larger allocation of shared resources. Allocating a larger share of shared resources also reduces the variance of I/O performance. For most applications, moderate I/O performance is more than enough. However, for applications that require greater or more consistent I/O performance, consider an instance type with higher I/O performance.
https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/instance-types.html