> At that scale wouldn't it be easier to just build everything out of a few VMs at a cheap service?

I have a handful of AWS Lambda functions with a DynamoDB backend serving hundreds of clients, my bill for the month of April was $0.01.

No, a VM wouldn't cut it.

But you are right that there are certain slots where AWS doesn't make sense: There's one in the lower middle range where you can save a bunch of money by using a VM or two with your own DB servers. And there's the one where you're so big it might actually be worth it to implement the whole stack yourself.