No, they don't count CPUs nor instances but HOURS. You have 750 hours per month. 1 instace 24/7 = 24*30 = 720 hours per month - it's free. 2 instances = 2 * 24*30 = 1440 - 750 = 690 hours to pay etc.
Here is a nice calculator for this:http://calculator.s3.amazonaws.com/calc5.html
And about a micro instance:
Micro Instances - Instances of this family provide a small amount of consistent CPU resources and allow you to burst CPU capacity when additional cycles are available. They are well suited for lower throughput applications and web sites that consume significant compute cycles periodically. Micro Instance 613 MB of memory, up to 2 ECUs (for short periodic bursts), EBS storage only, 32-bit or 64-bit platform.