This example shows how Terraform uses the aws_ami data source to find the latest Amazon Linux 2 AMI by filtering on name and owner. Terraform queries AWS during apply, receives the most recent AMI ID, then uses that ID to create an EC2 instance. The execution table traces each step: starting apply, querying AMI, assigning AMI ID, creating instance, and finishing. Variables track the AMI ID and instance type values as they update. Key moments clarify why the lookup happens first, what if no AMI matches, and why most_recent is important. The quiz tests understanding of AMI selection, creation step, and effect of removing most_recent. This process ensures Terraform dynamically uses the latest AMI without hardcoding IDs.