I was trying to provision spot instances via Ansible yesterday, and almost all my requests failed, even when I put my spot price == the on-demand price of that instance.

So, when I had a look at the spot pricing graph, I found something very interesting:

The spot price of the instance in us-east-1a is more than the on-demand price, which confused me. [in fact, ~5x times higher]

Aren't spot instances preferred for the low cost? If yes, then why is the price higher than the on-demand price?

According to AWS's docs:

Spot instances provide you with access to unused Amazon EC2 capacity at steep discounts relative to On-Demand prices.

Also, does this mean that people are bidding over the on-demand price? If yes, then why so? Aren't they better off with an on-demand instance?

Or did I understand the concept of spot instances wrong?