Amazon has recently announced Micro instances for Amazon EC2. I'm also keep reading about "... allow you to burst CPU capacity when additional cycles are available."
My question is, what does CPU burst mean? I want to know/understand this better.
Any pointers, articles, documentation, etc. on the same are appreciated.
Good question - meanwhile there is more information available regarding this topic:
Amazon has added a still pretty high level FAQ, see How does a Micro instance compare in compute power to a Standard Small instance?
The Amazon EC2 User Guide has gained a dedicated, elaborate and especially illustrated chapter on Micro Instances as well, it is a highly recommended read for everybody thinking about using this interesting instance type!
Finally, Amazon EC2 Micro Instance and Stolen CPU offers an interesting analysis and demonstration how the throttling works, as observed on a micro instance running Ubuntu Linux.
In a nutshell, if the host is not experiencing CPU contention, you'll be able to use more CPU "shares" (for short periods of time) than are normally reserved for your EC2 instance.