When create an Oracle Database on the Amazon cloud you will need to store you database files somewhere on the EC2 cloud. There are basically three places where database files can be stored:
1. Local drive - This is the local drive that is part of the virtual server EC2 instance.
2. Elastic Block Storage (EBS) - Network attached storage that appears as a local drive.
3. Simple Storage Server (S3) - 'Storage for the Internet'.
S3 is not high speed and intended for store static document type files. S3 can also be used for storing static web page files. Local drives are ephemeral so not appropriate to be used as a database storage device. The leaves EBS which is the best place to store database files. EBS volumes appear as local disk drives. They are actually network-attached to an Amazon EC2 instance. In addition, EBS persists independently from the running life of a single Amazon EC2 instance.
If you use an EBS backed instance for your database data, it will remain available after reboot but not after terminate. In many cases you would not need to terminate your instance but only stop it, which is equivalent of shutdown. In order to save your database data before you terminate an instance, you can snapshot the EBS to S3.
Using EBS as a data store you can move your Oracle data files from one instance to another. This allows you to move your database from one region or or zone to another. Unfortunately, to scale out your Oracle RDS on AWS you can not have read only replicas. This is only possible with the other Oracle relational database - MySQL.
The free micro instances use EBS as its storage.
This is a very good white paper that has more details:
AWS Storage Options
This white paper also discusses: SQS, SimpleDB, and Amazon RDS in the context of storage devices. However, these are not storage devices you would use to store an Oracle database.
This slide deck discusses a lot of information that is in the white paper:
AWS Storage Options slideshow