EC2 Placement Groups in Amazon Web Services are a way to control how your Amazon EC2 instances are physically placed on the underlying infrastructure, and this placement directly affects performance, latency, and fault tolerance; instead of letting the cloud randomly distribute instances, placement groups let you influence whether instances are kept close together for high-speed communication or spread across hardware for better resilience. There are three main types: Cluster Placement Groups, which place instances close together in the same data center rack for very low latency and high network throughput, making them ideal for high-performance computing, big data processing, or tightly coupled distributed systems; Spread Placement Groups, which distribute instances across different hardware to reduce the risk of simultaneous failures, making them useful for critical applications that need high availability like small databases or essential services; and Partition Placement Groups, which divide instances into logical partitions so that failures in one partition don’t affect others, commonly used in large-scale distributed systems like Hadoop or Cassandra clusters. In practice, choosing the right type depends on whether your priority is speed (cluster), fault tolerance (spread), or scalable distributed architecture (partition), and using them correctly helps balance performance, reliability, and scalability in cloud deployments.