Difference between EC2 "Image" vs "template" vs "create more like this"

To create an exact copy of your current instance with all software, configurations, and settings, you should use an Image (AMI).

Here are the key differences between the three options:

Image (AMI - Amazon Machine Image): An AMI is a complete snapshot that captures everything inside your instance, including the operating system, installed applications, software configurations, and Windows server settings like firewall rules. When you create an AMI from your existing instance and launch a new instance from it, you get a true copy with all the software and internal configurations preserved. This is the best option for your needs.

Template (Launch Template): A launch template stores the launch configuration parameters for EC2 instances, such as instance type, subnet, security groups, IAM roles, and network settings. However, it does NOT capture the software installed inside the instance or Windows server configurations. It's useful for consistently launching instances with the same EC2-level settings, but you'd still need to specify which AMI to use.

"Launch More Like This": This feature copies certain configuration details from an existing running instance to help you quickly launch a similar instance. It replicates settings like instance type, availability zone, security groups, IAM role, and tags. However, it does NOT clone your instance or capture the internal software and configurations. It's essentially a shortcut that pre-fills some launch parameters.

Recommendation: Create an AMI from your current instance first, then launch new instances from that AMI. This ensures you get an exact copy including all installed software and Windows configurations. You can optionally combine this with a launch template to standardize the EC2-level settings as well.
Sources
Launch an EC2 instance using details from an existing instance - Amazon Elastic Compute Cloud
Amazon Machine Images in Amazon EC2 - Amazon Elastic Compute Cloud