A placement group is a logical grouping of instances within a single AZ.
Placement groups are recommended for applications that benefit from low network latency, high network throughput, or both. A hadoop cluser or casandra cluster where nodes have to communicate fast between each other are examples.
Creating Placement Group & Launching Instances
First, you create a placement group and then you launch multiple instances into the placement group.
Amazon recommend that you launch the number of instances that you need in the placement group in a single launch request and that you use the same instance type for all instances in the placement group. If you try to add more instances to the placement group later, or if you try to launch more than one instance type in the placement group, you increase your chances of getting an insufficient capacity error.
Details on creating a placement group and launching instances can be found @ http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/placement-groups.html#create-placement-group.
Terminating Placement Groups & Instances
Before you can delete your placement group, you must terminate all instances that you launched into the placement group. You can read more about deleting a placement group @ http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/placement-groups.html#delete-placement-group.
If you stop an instance in a placement group and then start it again, the start may fail if there isn't enough capacity for the instance. You may also stop and start all of the instances in the placement group, and try the launch again. Restarting the instances may migrate them to hardware that has capacity for all the requested instances.
Placement Group Pricing
There is no charge for creating a placement group.
Placement Group Limitations
Placement groups have certain limitations. Read more @ http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/placement-groups.html#concepts-placement-groups.
Important Notes (Exam Tips)
Placement groups can’t span across multiple AZs. However, names should be unique across the AWS account.
There are restrictions on the instance types that can be launched in placement groups: only compute optimized, GPU, Memory optimized, storage optimized. For example, no t2 micros.
Recommendation from AWS is to use homogeneous instance types (instances of same type and same family) in a placement group.
Placement groups cannot be merged.
You cannot move an existing instance into a placement group; instead you can create an AMI from your instance and move that into the placement group.