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1) Because a billion-line init script is a gross exaggeration.

2) What do you do if you have 1,000 servers and your upstart script has to change? Fabric is nice to have in situations like that.

If you have 1000 servers and you're using Fabric to modify your init scripts, then I weep for you.

Well before you get to that level you should be using configuration management software (cfengine, puppet, et al.) to handle your servers.