Former Amazon engineer here. Despite the downvotes, you are making an excellent point.

Amazon, among other FAANG companies, never needed containers shipping entire bundled OSes.

Deploying a "base OS" (using PXE or netboot) can be done very reliably both on a hypervisors and VMs.

A simple build system can then generate traditional packages and push them into VMs allocated for a specific product.

It provides better security isolation and the ability to receive security updates on OSes and also on dynamically linked libraries.

Building and deploying new versions of you product is also much faster, especially at large scale: only your application package is rebuilt and deployed.