Exactly. There's certainly a market for VPSs and other cloud services that have a hard cost cap. AWS has apparently decided that they're fine with not competing for that slice of the business.

Setting cost caps on more complex applications that use a lot of different AWS services would get complex in a hurry and could easily have unintended effects.

As someone else wrote, I view this as primarily a simple VPS for people who are already using AWS for other things. I suspect that AWS isn't really interested in being a VPS-only provider for the most price-sensitive customers.