An instance can be a set of 3+n TYPO3 installations (Live, Live Failover, Staging, Development per Developer) as long as the scope of the installation remains the same. An instance can also be a single TYPO3 installation running multiple websites for multiple clients.
Here are some examples:
You have a team of 12 developers all working on a single project that runs within a single TYPO3 installation = 1 instance.
You have a project with a development server, a staging server and 200 frontend servers all serving the same content = 1 instance.
You have a single TYPO3 installation running 12 microsites for 12 clients = 1 instance.
You have 12 microsites for one client and every microsite is running on its own TYPO3 installation = 12 instances.
You have 5 clients and run 3 different websites per client, each with their own TYPO3 installations = 15 instances.
In case you are unsure about your setup, contact us and we will help you decide which plan fits best.