CloudFormation - LaunchTemplate MarketType

The recommended approach for launching a mix of Spot Instances and On-Demand instances is by using EC2 Auto Scaling Groups. These will allow configuring a flexible approach with multiple instance types and availability zones, in order to follow best practices and tap into multiple Spot capacity pools. It will also allow the use of allocation strategies like Capacity Optimized to minimize the amount of interruptions and launch Spot Instances from the most-available capacity pools. Please refer to the Spot best practices user-guide page that details the allocation strategies, instance diversification, rebalance recommendation, etc. These will help to successfully adopt Spot for their Stateless, Fault-tolerant and flexible workloads.

EC2 Auto Scaling does not dynamically modify the mix of On-Demand and Spot Instances in the group, so it will not launch On-Demand capacity if Spot Instances cannot be launched. However, if Spot best practices are followed (instance type + AZ diversification, using the capacity-optimized allocation strategy), it will increase the chance of achieving the desired scale with Spot Instances.