Generally speaking, in IT country an instance is a specific 'example' or 'copy' of an abstract object. In database terminology, it apparently has a more specific meaning (something like a 'working copy', with the difference being that changes made to the instance are copied to the 'parent' database).

From ref 1:

Instance
An Oracle Instance is a running Oracle Database made up of memory structures (SGA) and background processes (SMON, PMON, LGWR, DBW0, etc.). Simply put, a database resides on disk, while an instance resides in memory. A database is normally managed by one, and only one, instance. However, when using RAC, multiple instances can be started for a single database (on different machines). Each instance is identified with a unique identifier known as the ORACLE_SID.

From ref 2:

directory server instance

A discrete invocation of a directory server. Different invocations of a directory server, each started with the same or different configuration set entries and startup flags, are said to be different directory server instances.