There are two kinds of instances in SWG. An instance is a lair that is unique to the group that enters it. In other words, the creatures etc. that appear in the lair are spawned specifically for the group that has entered the lair. An example of this type of instance is the Avatar Platform in Kashyyyk space.
Another kind of instance is a lair or area that will only accommodate a limited number of characters at a time. When you attempt to enter an instance of this kind, you are asked which instance you wish to enter, and are shown a display indicating the relative population of the instance, such as "light," "medium," "heavy," or "very heavy." An example of this sort of instance is Myyydril Caverns on Kashyyyk. There are 10 instances of the Caverns, and a character can enter any one of the ten. Each is identical in content; the instancing allows more people to enter the instance and to the quests there.