An EC2 instance is a virtual server provided by Amazon Web Services (AWS) that allows users to run applications in the cloud. It offers scalable computing capacity, meaning you can easily adjust the resources based on your needs. Users can choose different types of instances based on factors like processing power, memory, and storage. With EC2, you can launch instances quickly and pay only for what you use. This flexibility makes it suitable for various applications, from hosting websites to running complex data analysis. Overall, EC2 instances help businesses manage their computing resources efficiently and cost-effectively.