MYSQL: Many slave servers with smaller resources or less with larger resources

Solution 1:

It depends.

The most likely thing to adjust in hardware is RAM. If you tune innodb_buffer_pool_size to about 70% of RAM and that is bigger than the size of all the data, then there will be very little I/O.

If that is not practical (or too expensive), then if the "working set size" is small enough, you still get benefit for that cache.

Else you will need some I/O horsepower.

Don't worry about the speed or the number of CPU cores. That is rarely the bottleneck.

Use this to discover which queries are in the most need for optimizing: http://mysql.rjweb.org/doc.php/mysql_analysis#slow_queries_and_slowlog

Add 2 cheap Replicas and see how well they perform, then come back with some more numbers to discuss.