An instance is literally just someone's computer with the software running. All your stuff lives on someone's computer. Different computers can talk to one another to allow people who put their stuff on those computers to see each other's stuff (federate) or they decide not to, like cutting off a computer with a lot of batshit insane people (defederate). They're running the same software so the language is the same. Like your stuff lives on lemmy.today, I don't know where and who owns that computer, while my stuff lives on sopuli.xyz, which is a computer that is owned by some random Finn, but those computers talk to one another, so we get to talk to one another.