Xen offers easy ways of doing fair I/O sharing between guests. These servers they're using are most likely multi-tenant systems with 256-512GB of RAM and 6-12TB of SSD storage. Providers don't like keeping expensive systems around that aren't making money, especially when demand changes every hour, so I expect that they have at least 4 instances sharing the I/O of each host (especially when they mention broad ranges of expected I/O).

The most likely reason for not slicing these systems up to smaller instances is they want to maintain consistent, high performance I/O.