I’ll try to explain without using buzzwords like “Cloud storage” and “virtual hosting”.
AWS is not one thing, it’s a series of services that Amazon offers at low-cost monthly rates. At its core, you’re basically renting server space from Amazon. The different services depend on what sort of server space you’re renting.
- Amazon Simple Storage Service (S3). The most basic service. It’s basically a hard drive where you can put whatever you want, such as photos or back ups of your documents. You can set passwords and permissions and accessibility so that people can download or upload to it but not delete.
- Database Hosting. Amazon will host and maintain a SQL accessible database for you. I believe the only access you have is via SQL queries, so you can’t just use it out of the box to upload your files.
- Elastic Computing Cloud (EC2). The most versatile of the services. It’s basically a remote computer that you can do whatever you want to with it, accessible via Windows Remote Desktop or telnet if it’s a GNU/Linux or UNIX computer. The main use for this is to host web sites and other applications that require people logging in to do stuff and administrators to manage the stuff.
- They have a few other services that are more esoteric and complex, like networking your EC2 computers and such. The prices vary greatly mainly depending on where you want the services to be physically located (US, Canada, Brazil, etc), how often they will be used and how much hard disk space you need.
I don’t know much about comparable services, I’ve heard that Dreamhost is pretty good, but I don’t think that they offer as wide of a range of services. Stay away from GoDaddy, they are overpriced and slow.