Instances, also known as instance dungeons or simply “dungeons”, are areas where multiple copies of the same area can exist concurrently. This means that multiple groups can both be doing the same activities in the same location, yet not interfere with one another.

“Instance” can also refer to a particular copy of such an area. Other areas, such as battlegrounds, are also instances, enabling multiple groups of players to participate at the same time.

Content borrowed from wikipedia.org