I am personally currently unaware of any AGPLv3 licensed software in use in an AWS service. That said, I would be skeptical of advice to use AGPLv3 due to any particular organization's current policy on the license.
Regarding Presto, work on the service includes changes that should go upstream. For the changes that are appropriate for upstream (e.g., ones that are generally useful, not only of benefit or interest to AWS), PRs are sent. For example: https://github.com/prestosql/presto/pulls?q=is%3Apr+author%3...
Practically speaking, it is difficult to maintain a development branch of any software project with sufficient change velocity if you have a goal of continuing to integrate improvements from the upstream version.
I think there's a serious amount of FUD around it. I suppose it's because of how rare it is. With more usage, it would probably bee seen as less dangerous.
See also [2]
I hope in the future the Elastic, TimeScale, Confluent and any other "fuck Amazon" license could be merged into one and kind of standardized on as many freedoms as possible, while keeping AWS out of it.