An Instance refers to a specific copy of a certain map, that is separate from the other instances of that map. 


Each instance of a specific map will have the same map layout, NPCs, monster types and so on, but are handled by the server as totally separate maps. Shared maps, like the world maps may have more than one instance that players can freely chose from. These are generally referred to as L followed by the instance number(L1, L2 etc).


They are commonly used for private meeting for things like torch parties, trades, etc, or by players who want to avoid lags when an instance is too crowded. You can change Ls by clicking on the L in the left top part of the minimap (shown to the right) and selecting which instance you would like to join.

World and Zodiac bosses only spawn on the instance L1, so on the maps where these spawn you may want to stay on another L unless you want to fight them. 

A little more information about Instances

Instanced maps are a common aspect of online multiplayer games, they are copies of the same map template, but from the server will treat them as separate maps, and are used to reduce load on a single map and to allow private versions of a map to be spawned.

In Crystal Saga, most world maps have more than one instance, and the player is free to select what instance he or she wants to be on. Dungeons and some activities like the Crystal Ladder, where you have to make a party to enter spawn a private instance for your party, that is separate from, and inaccessible to, other parties.