Amazon EC2 Auto Scaling is the service that allows the automated adjustment of the number of compute instances in the application's fleet based on demand, ensuring that the correct number of instances is available to handle the application's load. This leads to optimized resource allocation, which aids in maintaining consistent application performance. Amazon RDS is primarily a database service and does not deal with the scaling of compute resources. Amazon CloudWatch is a monitoring service that can initiate scaling actions but does not itself scale the number of compute instances. Amazon S3 is an object storage service and does not deal directly with scaling compute resources.