Can you really spin one of these up on demand? That obviously means that they have machines of that size (or greater) sitting idle, waiting for someone to use them. That's mind-boggling.
They can still divide them up for the smaller sizes preemptible and destroy those once they get a request in. That way utilisation should be quite good. Yield probably not as high (since hardware costs will be higher than for multiple small machines) but the yield of renting out the highest variant sometimes will be worth it.
Yes, I configured a 64 cpu machine in a matter of minutes, ran a test on it for 24 hours, then shut it down and deleted the instance. Total cost was around $200.