When you start a Java program, you start up a new JVM. When you start up a second Java program while the other one is still running, you will have two JVMs running. The word "instance" is just an English word that refers to the actual copies of the JVM that are running. So, when you start up two Java programs, you'll have two instances of the JVM running.
This word is also used to indicate the relationship between classes and objects. An object is an instance of a class. In other words, a class is the plan that tells what objects of that class should look like, and you can make concrete instances of the class (objects).