One more thing about instances; an instance runs on a single server, not a cluster of them. Some games set aside specific servers in a cluster as being for certain kinds of instances; I don't know if STO does that or just treats them all like one big list of generic servers.
The term "shard" is sometimes used in other games as "server" or "realm". When you play a game with multiple shards, such as WoW or TOR, when you pick which 'server" to put your character on, that's a shard. Examples would be Mal'ganis or Moon Guard in WoW, or Helm of Graush or Jekk'Jekk Tarr in TOR.
In STO, there's only one live production shard, Holodeck. There are two publicly-accessible Test shards, Tribble and Red Shirt.
Games that do many shards rarely need to do any instancing, although it does happen, and tends to be really annoying when it does because they don't think about providing tools to manage groups and conversations across instances.
Cryptic's had plenty of practice; they implemented City of Heroes as a small number of shards with a lot more instancing than some other games. That's why they had to do things like global chat, and also they made it not too difficult to change to your buddy's instance, although you have to ask him what instance that is. (unless they'e changed that).
In STO they did one shard, so there are a lot of instances, but there are great tools for talking across them (zone chat goes to all instances of the zone, which has become the industry norm for this) and for joining up with your buddies.
This happens in TOR too, and it's incredibly annoying when it does because changing instances blows the cooldown on your quick travel, so you can't do it again for 30 minutes.
I prefer one or few shards with instancing to many shards with almost no instancing. The latter is just lazy; you're making me do the instancing at character creation, instead of handling it on the fly programmatically. Many times I've been talking to someone outside of a game and wanted to meet up with them in game, only to learn they're on a different server. I hate that.