What is a key characteristic of Spot Instances in AWS EC2?

Spot Instances in AWS EC2 are characterized by offering significantly reduced prices based on bidding for spare capacity. This means that users can request unused EC2 capacity at lower rates compared to On-Demand pricing. The spot pricing fluctuates based on supply and demand, and users can choose to bid a maximum price they are willing to pay for the instances. If the market price goes above their bid, the instances may be terminated, but during times of lower demand, users can benefit from drastically reduced pricing, making Spot Instances a cost-effective option for workloads that are flexible and can tolerate interruptions.

The other options do not accurately reflect the nature of Spot Instances. Fixed monthly rates pertain typically to Reserved Instances, which require a commitment for a term of one or three years. Spot Instances are not designed for long-term workloads with predictable traffic, as they are inherently more volatile and can be reclaimed by AWS with little notice. Finally, while reliability is achievable in terms of infrastructure, Spot Instances do not guarantee uptime levels such as 99.99%, as they can be terminated when the bid price exceeds the current spot price.