Instancing Explanation:
Quote: ""Given a scene that contains many objects that use the same geometry, you can draw many instances of that geometry at different orientations, sizes, colors, and so on with dramatically better performance by reducing the amount of data you need to supply to the renderer. - DirectX 9 MSDN.com""
Each object has a lot of unique information it needs to process various factors like light and shading and etc. By combining all the objects, they share that unique information. For example, position XYZ. If you had 10,000 objects, each would have it's own unique coordinates. But say if all those objects were just one object you'd only have 3 coordinates (XYZ... actually there's more but that's more complex) compared to 30,000. That's a lot less data.
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