The AWS Cost and Usage Report is designed for granular analysis of AWS spending and usage. It allows filtering by tags, enabling users to track costs in a detailed manner, specific to individual projects or environments. This capability makes it an essential tool for cost tracking and optimization in complex AWS environments. Organizations often use tagged resources to allocate costs to the correct department, project, or client. Understanding this feature is crucial for designing cost-optimized architectures as it can identify cost-saving opportunities and ensure accurate chargebacks or showbacks within a company.