I know that AWS EFS is a shared space for keeping files to be accessed from multiple EC2 instances.
From my understanding, AWS EFS is block based storage. So can we install software or OS on it?
Just a thought. Please correct me if i am wrong.
You can use EFS the same way you'd use any NFS share, which means that anything reading or writing standard files can use EFS in the same way you'd use an EBS volume -- except that the EFS filesystem can be mounted to multiple instances at the same time, while EBS volumes cannot.
What you can't do is boot an EC2 instance from EFS, so installing the OS on an EFS filesystem would not work.