Instance == server == each individual lemmy (Beehaw is its own instance, so is lemmy.ca, etc)
Basically, reddit was a bunch of communities on one server (the reddit servers)
Each lemmy instance has its own collection of communities, and each lemmy is connected together, so users from any individual lemmy can read and interact with communities and users from other lemmys (this is federation)
All of these lemmy instances federating makes up the greater lemmy network as a whole