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This video tutorial teaches how to create a custom Amazon Machine Image (AMI) from an EC2 instance. An AMI is a virtual machine template containing all the necessary information to boot an EC2 instance with custom software. Creating your own AMI is essential for building infrastructure using EC2 auto scaling groups, which require self-configurable instances to automatically scale based on application requirements. AMIs serve as the basic unit of deployment, allowing auto scaling groups to dynamically boot new custom instances.