"Availability Zones are distinct locations that are engineered to be insulated from failures in other Availability Zones and provide inexpensive, low latency network connectivity to other Availability Zones in the same Region.
Each availability zone runs on its own physically distinct, independent infrastructure, and is engineered to be highly reliable. Common points of failures like generators and cooling equipment are not shared across availability zones, and availability zones are designed to be independent with failure modes like fires and flooding."
Source: Feature Guide, Amazon EC2 Availability Zones (developer.amazonwebservices.com)
For information about setting availability zones, see Use Multi-Region on Engine Yard Cloud.