What is AMI: An Amazon Machine Image (AMI) is a special type of virtual appliance which is used to instantiate (create) a virtual machine within the Amazon Elastic Compute Cloud. It serves as the basic unit of deployment for services delivered using EC2. We can say that AMI is an image from which an instance can boot

What is Amazon EC2: Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers

Why create AMI: When we terminate instance all the data (including software we installed) of the instance get deleted. What if we want some preinstalled software or some data each time we launched instance, for that reason we need to create AMI

Two types of AMIs: There are two types of AMIs based on storage; S3 backed and EBS backed. In the following tutorial we will create S3 backed AMI:

http://patodirahul.blogspot.com/2011/03/create-ami.html