Technical Considerations
Having players participate in instances tends to spread out populations of players, instead of concentrating them, which may reduce or level the workload for both the server and client by limiting the number of potential interactions between players and objects. Because the player characters in the instance do not need to be updated on all the information going on outside the instance, and vice versa for the characters outside the instance, there is an overall decrease in demands on the network, with the net result being less lag for the players. This also reduces the demands on each player's computer, as the number of objects to be processed can be more easily limited by the game's developer. The developer can better reason about the worst case performance requirements in an instance because they do not have to consider scenarios such as hundreds of players descending on any location at any time.
Read more about this topic: Instance Dungeon
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