Which component provides a firewall at the instance level in AWS?

The correct choice is Security Groups, which act as a stateful firewall for EC2 instances in Amazon Web Services (AWS). Security groups manage inbound and outbound traffic rules, allowing users to define what traffic is permitted to and from instances based on defined protocols, ports, and source/destination IP addresses.

When creating a security group, you specify which traffic is allowed to reach your instances, and the rules are applied at the instance level. Security group rules are stateful, meaning if you allow incoming traffic from a specific IP address, the response traffic is automatically allowed. This provides a robust layer of security at the instance level, ensuring that only designated traffic can communicate with your EC2 instances.

In contrast, Network ACLs provide a stateless firewall at the subnet level, controlling traffic in and out of a subnet but are less granular than security groups. Route Tables direct network traffic but do not filter or manage security. Security Policies typically refer to configurations for services or applications and are not directly related to firewall capabilities.

Thus, Security Groups are explicitly designed to serve as a firewall at the instance level, fulfilling the requirements of the question.