Amazon EC2 instances are cloud servers (whereas OneDrive is cloud storage) so for webapps you can look at running on an EC2 instance the same way you would look on any server. So yes, it would be OK to run webapps on an EC2 instance with the embedded database on the same server (since all the DF processes are running on the same machine as the embedded database files there are no oplocks issues).

Of course, there are lots of reasons to consider more than a single server, but it really a function of what your app is doing and what kind of security and performance you need. It might be worthwhile to watch the Learning Center video about WebApp Deployment to look at the various configurations you may want to consider.