CloudWatch monitors logs for specific keywords, if it finds a certain number of them within a time threshold it creates an "Alarm" which then triggers a Lambda.
I know it works and it fills a gap for people but it just feels odd to me. It's like there is cron -> log -> monitor -> alarm -> event -> lambda -> script when you could just have cron -> script.
I'm probably just hung up on the naming and the fact that these events are branded as part of Cloudwatch. If there was some service spun off that just generated events in AWS I wouldn't raise an eyebrow, even if under the hood it was exactly the same thing.