> Ultimately, I found the answer in their tech docs where it was spelled out clearly that an fly instance is hardwired to one physical server and thus cannot fail over in case that server dies.

Majority of EC2 instance types did not have live migration until very recently. Some probably still don't (they don't really spell out how and when it's supposed to work). It is also not free - there's a noticeable brown-out when your VM gets migrated on GCP for example.

Can you shed some more light on this "browning out" phenomenon?