I think you missed this part: "launching a set of instances with dedicated tenancy does not in any way guarantee that they'll share the same hardware (they migh

I think you missed this part: "launching a set of instances with dedicated tenancy does not in any way guarantee that they'll share the same hardware (they might, but you have no control over it)". In other words, when launching many small/medium instances they will make sure to stuff them onto only a few physical machines. So dedicated tenancy does not mean no virtualization - it just means that you don't share hardware with other users. So this is really just a way to accommodate whatever privacy policies that might require such thing.