The WordPress to Cloud solution currently keeps data in S3, but not source code. I.e. whatever WordPress stores in the database, ends up stored in S3, but the php files and such are stored on the Web tier.
In the future we might implement storing source code in S3, but for now syncing code from a repository is the way to go. Using source code repository has other benefits too, such as change tracking, branch management, etc. so at a certain scale you'd probably want to have a source code repository anyway, so that you know what exactly you have on the web servers, and who and when made what changes.