You can think of instances like communities, You can join different communities with different rules and all these communities are connected to each other. So no matter which instance you choose, you’ll still be able to interact with people from the others.

Now the reason for the existence of different instances is the same reason why there are different communities in the world. Some people feel more comfortable in groups of people with similar tastes.And having multiple instances ensures that no instance “owns” the social network.