Yeah you can say this, to be precise you can replace the word “instance” by “server”, who is basically an computer opened on the web.
Because a website builder for me I would imagine an framework or a thing design to make websites wrote in php like.
You can speak of an App, even it can be confusing for you, but an app for a server. You can even have it installed, on an server with an static IP but not domain or website along.
What you said first was even right. you can even do host it with an laptop for your home network and in this case you don’t need an website ^^