Hosting does not include software development. It does not include sysadmins. I'm not sure if it even includes data center personel (Wikipedia owns its own servers. That means you have to hire people to plug them in. Amazon isnt doing it for you).

Software doesn't write itself, and improving the software for Wikipedia is where the lion-share of the budget is going.

That doesn't even get into less technical roles like legal or community outreach, which are very much spending for wikipedia.

Hosting is a small portion of the budget because its by far the cheapest part of running a major website. In many ways its also the easiest part to make cheap, simply by not using AWS.