An Oracle instance is a system global area or SGA (an area of memory used for database information shared by database users) AND a set of background processes such as SMON, DBWR etc. An instance is not a database although you often see people referring to the two things as if they were the same.

Ans2:

"Instance" means "Server" almost every time you see it.

The word "instance" came into use because of it's more precise meaning:
a specific collection of processes acting like a single server. Hence a
"Parallel Server" has more than one "instance", each instance acting
independently, but cooperatively on more than one system.