That's only if you compare raw compute. When you create a VM on AWS it will get <10% utilization (many times close to 1%). Sometimes you need to factor in for varying utilization so you need to overprovision but if you have many services and the deployment unit is the VM then you end up having tons of VMs doing nothing. With containers the deployment model becomes more granular, hence you can share the VM and increase utilization, but you'll still pay for idle time. With hosted functions (like lambda) you don't pay idle time, so in many cases it's much more efficient.

Indeed, if you host your own "lambda" implementation, you may or may not have cost improvements. In this case it may be just a matter of operational efficiency.