There is physical separation between availability zones, though I don't think it's been made clear what that separation entails on a brick-and-mortar level. Here's Amazon's description:
"Availability Zones are distinct locations within a Region that are engineered to be isolated from failures in other Availability Zones and provide inexpensive, low latency network connectivity to other Availability Zones in the same Region."
I've always envisioned AZs in a given region as separate facilities on the same fiber loop.
Historically, we know that power and network outages have generally been isolated to a single AZ, supporting their claim of a high degree of isolation.
Here's the relevant page in the EC2 docs:
http://docs.amazonwebservices.com/AWSEC2/latest/UserGuide/in...
