I deal with this a lot with my work at PiCloud and you very rarely see a lack of capacity in the on-demand pool (across every availability zone). You actually

I deal with this a lot with my work at PiCloud and you very rarely see a lack of capacity in the on-demand pool (across every availability zone). You actually see high spot prices due to what at first glance seems "irrational"; incredibly high bids on instance types, sometimes 3-4x over on-demand prices. I suspect such high bids are placed by customers of the spot instances who absolutely do not want their workload terminated early by Amazon and are willing to take the risk of paying more to run it to completion. If you are a webapp though, like Pinterest, you don't have this desire. Hence, it makes sense to dynamically switch.