It's about time.
While Amazon began life as an online department store it has transformed over the last decade into the leader and definer of the cloud. It may be the only true competitor Google has, in that it's the only other company I know of that understands the importance of low-cost computing.
The Amazon Linux AMI is designed for launching applications within the Amazon EC2 cloud. It's a stripped-down server Linux that starts from a command line.
In other words this is not a general purpose distribution. Amazon is not trying to go head-to-head with Red Hat, Novell or Oracle. This is purpose-built, the purpose being Amazon's cloud, which remains the most popular cloud host for business applications.
Its main goal is security, Amazon says.
The Amazon Linux AMI limits remote access capabilities by using key pairs, disabling remote root access, and disabling interactive logins. Unlike some traditional Linux installations, the Amazon Linux AMI minimizes the number of non-critical packages which are installed on your instance. This means that by default there are no extra running services that must be secured, limiting your exposure to potential security vulnerabilities.
From a business standpoint, then, it is designed to protect Amazon, and its cloud customers, not just from intruders but from themselves. The biggest security threat many systems face remains user error, and if you don't have ready access you can't make big errors.
It reminds me of a trick my lovely bride began using when she first started working with an online system many years ago. When she was in development her screen background was blue. When she was actually inside the working system, it was red. (I also noticed her shoulders tensed-up with the red screen.)
Error prevention is great security. Amazon AMI is very welcome.