I worked at a company where the whole server room was flooded. They had to replace everything and restore stuff from backups.

Two weeks later, they had to do it all over again because something went wrong with the air conditioning and the servers got cooked.

I kept recommending going with AWS because of that... I no longer work there, but as far as I know they're still running their own servers.

Why AWS and not just co-locating the servers somewhere?

I wasn't dead set on AWS, I was just using it as an example. Any sufficiently large company would have worked.

>it's not that hard to arrange proper redundancies in your systems

If it really were like 'apt-get install redundancy' I'm pretty sure that AWS would have 1/10th the clients it has now.

Because sometimes cloud servers are very cost effective, easy, and fast to deploy: Digital Ocean for example.

$40 / month for 4gb of ram, 4tb of transfer, and two cores, is very cost effective. Linode is also very reasonable.

If all I need is that scale of computing, what should I use instead that makes sense other than cloud services? Setting up colo or a dedicated box for that would be more expensive and a much larger hassle.

Arguably, Digital Ocean is more like a regular hosting provider with better onboarding. Plenty of hosters offer comparable infrastructure for the same price (you can even get something dedicated).

They're also far cheaper than AWS, where you pay a premium for the elasticity and access to the ecosystem. If there's anything to compare AWS with, it would be Google Cloud Platform, Azure and maybe Rackspace.

Digital Ocean is comparable to EC2. But AWS does LOTS more.

Well, I admit, those prices are pretty good. I looked at AWS pricing 3 years ago at a SaaS company with steadily growing traffic, and at the time it didn't make sense. It might now.