Amazon Machine Images are essentially templates of preconfigured EC2 instances.

They provide the necessary configuration to launch an Instance such as:

Launch permissions

Elastic Block Stores snapshots or a template for the root volume ( like OS, and applications)

a block device mapping specifying the volumes to attach when instance is launched

AMI are regional but can be copied to other regions.

(more here)

AWS provides lots of different AMIs (Linux, Redhat, Windows but you can also launch an instance from an existing AMI, customise the instance (for example, installing software on it), and then save this updated configuration as a custom AMI.