1) Amazon EC2 provides scalable compute capacity in the cloud via virtual machine instances. Instances are launched from templates called AMIs and are categorized into different types based on their compute, memory, and storage capabilities.
2) EC2 offers benefits like elasticity, full control and configuration of instances, a wide variety of options for operating systems and software, high reliability through rapid provisioning of replacement instances, and manageability via AWS management consoles and APIs.
3) Key EC2 concepts include AMIs, instance types, EBS for persistent storage, security groups for access control, and billing based on hourly or per-second usage of instances and storage.