What does "multi-tenancy" mean in the context of AWS?

In the context of AWS, "multi-tenancy" specifically refers to a single application instance serving multiple customers or tenants. This architecture allows different customers to share the same computing resources while keeping their data and configurations separate and secure. Multi-tenancy is a foundational concept in cloud computing, as it enables greater resource efficiency, scalability, and cost-effectiveness. By maximizing resource utilization, AWS can serve many customers simultaneously without the need for each customer to maintain their own separate infrastructure.

This approach significantly reduces costs and simplifies management for both the service provider and users. Each tenant operates as if they have their own dedicated environment, yet they are all leveraging the same underlying infrastructure. This is common in Software as a Service (SaaS) models, where applications are built to accommodate multiple users with distinct needs but run on the same application framework.

The other options do not accurately describe multi-tenancy: using multiple AWS accounts relates to billing and not the sharing of application resources; creating several regions pertains to geographical distribution rather than customer interaction; and managing multiple databases across instances does not encapsulate the essence of sharing an application environment among various users.