Let's say you have 10 data blocks, and you have 4 parity blocks. You can now lose 4 servers containing a block and still be able to repair the data, whereas in 3 x Replica you can only lose 2, and have to store everything 300% of size, instead of only 140%.
And yes, it is unreasonable how much they charge for both storage and inter-az bandwidth.
So I'm pretty sure that you need to have at least 2 full copies in different AZs, and then likely at least some additional redundancy within a single AZ (in the form of erasure codes or a full mirror).
So that's at least 3-4x the amount of data. 1Tb of NVMe SSD capacity is around $200 and with 3x redundancy that's $600, or about 2 years of AWS S3 storage. As I said, it's expensive but not unreasonable.
In fact, the RS configuration is often in the >50 data blocks and >10 parity blocks range (albeit with an LRC/nested RS config) for object stores because it's more important to have that recoverability than repair efficiency. While one large provider I worked at did have a system whereby they did effectively have two copies of the RS-encoded data (so that 130% turned into 260%) across two AZs, they were actively in the process of swapping to the blocks being evenly distributed across the AZs, near-halving the total required disk space.
As I said before, most object storage is not on SSD, it's on hard disk: it's 20% of the price per TB, and most objects are read very infrequently. I can promise you that they're not paying $200 for 1TB of SSD either... I realise prices are higher than sensible in the last 6 months, but it was fairly easy to pick up SSDs for under $50/TB at retail pricing (and hard disks for under $10/TB) only a year ago.
S3 also has a reduced redundancy tier and infrequent access tiers that are quite a bit cheaper.
It _is_ expensive, but once you crunch all the numbers, it's actually not unreasonable. I'd argue that using the real S3 is overkill for most scenarios that don't need infinite scalability.