Instances are meshes (3D objects) used in Re-Volt to decorate tracks. Instance files are located in a track's folder and they consist of a .prm file for the mesh and optionally an equally named .ncp file for collision. They are separate from the actual world mesh (.w file) and they can have some properties to them.
There are quite a few PRM kits that can be used to create tracks. These kits come with .prm files and some texture sheets that can be used to assemble a track in the Instances MakeItGood mode. A guide for creating tracks this way is currently being created here.
An example for a track using instances to make up the track is Narrock Pass by Kipy. While the ground mesh of the track was modeled with Blender, the raceline of it is mostly defined with instances from a PRM kit.