Reserved Instance flexibility allows companies to apply reservations to instances that match the attributes of the reservation such as instance type and region, which provides cost savings while maintaining flexibility in which specific instances benefit from the reservation. This is advantageous as it helps in cost management and in making changes to the deployments without losing the benefit of the reservation. Modifying the instance family or offering class does not provide the same level of flexibility, and converting a reservation into an On-Demand Instance would negate the cost benefits of having a reservation at all.