AWS EC2 provides scalable, on-demand computing capacity in the AWS cloud. It allows users to launch virtual servers as needed and configure security, networking, and storage. EC2 offers several instance types with varying CPU, memory, and storage configurations. Users can store data on instance storage volumes or EBS storage volumes. EC2 provides features like security groups, elastic IP addresses, tagging, and virtual private clouds to isolate and manage resources. Pricing options include on-demand instances, reserved instances for steady-state workloads which provide significant discounts, and scheduled reserved instances to match reservations to recurring schedules.