Xen offers easy ways of doing fair I/O sharing between guests. These servers they're using are most likely multi-tenant systems with 256-512GB of RAM and 6-12TB of SSD storage. Providers don't like keeping expensive systems around that aren't making money, especially when demand changes every hour, so I expect that they have at least 4 instances sharing the I/O of each host (especially when they mention broad ranges of expected I/O).
The most likely reason for not slicing these systems up to smaller instances is they want to maintain consistent, high performance I/O.
There's a technical reason for the range, explained in the blog post:
> Why the range? Write IOPS performance to an SSD is dependent on something called the LBA (Logical Block Addressing) span. As the number of writes to diverse locations grows, more time must be spent updating the associated metadata. This is (very roughly speaking) the SSD equivalent of seek time for a rotating device, and represents per-operation overhead.
The most likely reason for not slicing these systems up to smaller instances is they want to maintain consistent, high performance I/O.