A "traditional" ISP host manages a server and gives you access to aspects of a user a/c sufficient to do waht you want. Often this is through a web interface. However, often you are stuck with their server configuration. With Amazon Web Services (with which I have no connection other than using them.). you get to set up your own server and you have full access to it. From their you can install waht you want. There are prebuilt server for your use if you want, including Moodle servers.
The fee is pay for what you use in terms of bandwidth and connections. It just seems to me that it is a new way of doing things. I have a Moodle 2.2 which I can turn off and on when I want to do things. When it is off I pay nothing. Last month I paid $7. (That is for very small use.). The main Moodle I use is on a dedicated server and ip address so no ISP fees for hosting.
Our colleague is correct, this is not really a help forum.
BTW, although it is used for running shops *which I have niot done) it can be used for anything. I did some modelling there due to the immense processor power available.