The cool kids have been combining containers and hardware virtualization for something like 10 years now (back to QEMU-Lite and kvmtool). Don't use containers if the abstraction gets in your way, of course, but if they work for you --- as a mechanism for packaging and shipping software and coordinating deployments --- there's no reason you need to roll all the way back to individually managed EC2 instances.

A short survey on this stuff:

https://fly.io/blog/sandboxing-and-workload-isolation/