[cedrichurst]

Reserved instances are simply a pricing construct. You're paying upfront for up to 24/7 usage, but you're running on the same pool as the standard instance. Dedicated instances, on the other hand, do what you're talking about but they're much pricier:

http://aws.amazon.com/dedicated-instances/

[Terretta]

The comment you replied to didn't talk about what they do. I took it to mean it's more accurate from a price perspective.