Indeed. Remember, AWS started as Amazon providing infrastructure as a service to internal projects, so individual teams and projects wouldn't have to go buy a bunch of hardware and ops staff in order to build products. Amazon itself is the biggest customer AWS has.

Thanks to economies of scale, it's worthwhile for Amazon to develop new features as full-scale products, which leads to truly amazing things like Lambda. No one in their right mind would develop Lambda in-house, but for AWS, it makes a ton of sense.