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The reason is that when you do health check, you want the VM to be working. Do the first check after initial setup time of 3 mins = 180 s < 200 s is reasonable.

The reason why our autoscaling is adding more instances than needed is that it checks 30 seconds after launching the instance and at this point, the instance isnt up and isnt ready to serve traffic. So our autoscaling policy starts another instance  again checks this after 30 seconds and the cycle repeats until it gets to the maximum instances or the instances launched earlier are healthy and start processing traffic  which happens after 180 seconds (3 minutes). This can be easily rectified by adjusting the initial delay to be higher than the time it takes for the instance to become available for processing traffic.So setting this to 200 ensures that it waits until the instance is up (around 180-second mark) and then starts forwarding traffic to this instance. Even after a cool out period, if the CPU utilization is still high, the autoscaler can again scale up but this scale-up is genuine and is based on the actual load.

Initial Delay Seconds  This setting delays autohealing from potentially prematurely recreating the instance if the instance is in the process of starting up. The initial delay timer starts when the currentAction of the instance is VERIFYING.

Autoscaling works independently from autohealing. If you configure autohealing for your group and an instance fails the health check, the autohealer attempts to recreate the instance. Recreating an instance can cause the number of instances in the group to fall below the autoscaling threshold (minNumReplicas) that you specify.

Since we need the application running at all times, we need a minimum 1 instance.

Only a single instance of the VM should run, we need a maximum 1 instance.

We want the application running at all times. If the VM crashes due to any underlying hardware failure, we want another instance to be added to MIG so that application can continue to serve requests. We can achieve this by enabling autoscaling. The only option that satisfies these three is Set autoscaling to On, set the minimum number of instances to 1, and then set the maximum number of instances to 1.