Rightsizing refers to the practice of analyzing and modifying cloud resources to match the required workload capacity while maintaining performance and minimizing costs. By selecting the instance or resource size that is most appropriate for the workload, organizations can avoid over-provisioning (which leads to unnecessary costs) or under-provisioning (which can lead to performance issues). It is an ongoing process that allows for cost optimization over time as demands change, differentiating it from fixed on-premises resources, which often require upfront capital investment based on peak demands.