I have always understood the utilization metric to indicate percent usage on ALL cores across your instances. This percentage is a reflection of total usage versus maximum capacity in your instance class, which for you is micro.
Because micro is the free tier, you can expect throttling to kick in quite fast on any micro instance, so don't utilize it much for any hard work (if at all). If you're going to see regular 100% usage on your micro instance, it would benefit you to upgrade to a small instance at least so that throttling doesn't annihilate your services when your spike lasts a second too long.
I've been using micro for a year or so now, and I definitely advise against using the free/micro tier for any kind of heavy lifting. A "few" spikes to 100% utilization is fine, but it sounds like this is more regular than a once-in-a-while kind of thing for you.