Difference between security groups (on AWS) and iptables

Solution 1:

As Tim told in comment, UFW is the frontend to iptables, so you should really compare iptables capabilities with Amazon Security Groups.

For me main SG advantage is integration to AWS infrastructure. It allows you to build entire stack using Amazon CloudFormation, get details about opened/closed ports/addresses via API etc. Disadvantages - it's vendor-locked, meaning you will need to redo everything if you decide to change hosting provider.

First of all, check Amazon VPC limits. If your rules count is within limits and your case doesn't require anything special like NAT implemented by iptables, it's sufficient to use Amazon SG only and leave UFW open. You can check this question as well for more details: Why have both security groups and iptables on Amazon EC2?