Understanding the Requirement: The company needs to migrate sensitive and critical data from on-premises SQL Server databases to AWS, aiming to increase security and reduce operational overhead.

Analysis of Options:

EC2 Instances with KMS: Running SQL Server on EC2 provides control but requires significant operational overhead for management, backups, patching, and high availability.

Multi-AZ Amazon RDS for SQL Server with KMS: Amazon RDS for SQL Server offers managed database services, reducing operational overhead. Multi-AZ deployment provides high availability, and KMS encryption ensures data security.

Amazon S3 and Macie: S3 is not a suitable replacement for relational databases, and Macie is used for data security and compliance but not for database operations.

Amazon DynamoDB and CloudWatch Logs: DynamoDB is a NoSQL database and does not support SQL Server workloads directly. CloudWatch Logs are used for monitoring, not for ensuring database security.

Best Solution:

Multi-AZ Amazon RDS for SQL Server with KMS: This solution meets the requirements for security, high availability, and reduced operational overhead by using a managed database service with encryption.