Not everyone gets spikes during holidays--for example Amazon and other retailers get super busy at Christmas, but it's the slowest time of the year for a lot of web apps.
That said, the last two Decembers we have had trouble instantiating new instances (in US-east-1a, their default and hence most popular location) in December. We solved the problem just by switching to US-east-1b for some tasks.
"In order to prevent an overloading of a single availability zone when everybody tries to run their instances in us-east-1a, Amazon has added a layer of indirection so that each account’s availability zones can map to different physical data center equivalents."
This is the beauty of aggregation: when you add a lot more different types of users to the system, the load tends to be balanced out because not everybody needs the same resource at exactly the same time. As long as the distribution of different resource requirement is relatively even, the larger the system is, the stabler it becomes.
Statistically, adding multiple standard derivations yield a smaller value than their sum.
This kind of edge cases will happen much more frequently when you have multiple smaller systems. A larger system helps you by balancing out those. Will a larger system run out of resources if everyone requests it at the same time? Of course it will, but the likelihood will be statistically smaller than smaller systems.
EC2 sprang from the problem that Amazon had to buy a bunch of servers to handle the load around the holidays and these servers went underutilized during the rest of the year. So they decided to lease those resources.
When asked about what happens to EC2 during the holidays, the engineer basically replied that Amazon has priority.
