It is b.s., but the good news is that you can often get a credit annually for whatever percentage they're down from their SLA (I don't know if RS does this).
Before you buy from a web host, check their SLA and ask how they cover SLA breaches. Don't do business with a company that won't put their money where their claims are.
Rackspace policy is obviously better since they charge a lot more.
My host has:
If Liquid Web is or is not directly responsible for
causing the downtime, the customer will receive a
credit for 10 times ( 1,000% ) the actual amount of
downtime. This means that if your server is unreachable
for 1 hour (beyond the 0.0% allowed), you will receive
10 hours of credit.
Rackspace has:
Rackspace Guaranty: We will credit your account 5% of
the monthly fee for each 30 minutes of network
downtime, up to 100% of your monthly fee for the
affected server.
I foresee a sharp drop in July profits... unless they weasel out of it by differentiating between "uptime" (i.e., does the CPU have power) and "reachability" (i.e., "Our network died! Sorry about that, but no soup for you").
Before you buy from a web host, check their SLA and ask how they cover SLA breaches. Don't do business with a company that won't put their money where their claims are.