CloudFormation is a configuration management service from AWS that allows users to create and update infrastructure programmatically using JSON or YAML templates. These templates define the properties of each resource, such as an EC2 instance, and specify the desired state of the infrastructure. CloudFormation can deploy infrastructure that's readily observable, including the Datadog Agent, which collects and forwards metrics, logs, and distributed request traces to a user's Datadog account. The template defines two AWS resources - an EC2 instance running Apache web server, and a security group allowing traffic on port 80. It also includes a Datadog resource that creates a monitor alerting when the EC2 instance becomes unavailable. The template accepts parameters for the API key and application key, which are used to configure the Agent and create the monitor. The configuration is organized into three configsets: Install, Configure, and Restart, each defining the commands and packages to be run on the instance. CloudFormation triggers a script that reads all the config keys to determine how to achieve the desired configuration. The template defines an EC2 instance with an Amazon Linux 2 AMI from the us-west-1 region, a custom security group exposing port 80 externally, and output variables for URL and InstanceDashboard values returned when the template is executed.