So, the way it works: Instance is a server your account is created and hosted on. Within the instance you registered with, people create communities - just like subreddits. You can search for communities within your instance but also from other instances. When searching for a community of interest, make sure to check option All. This will result in showing you communities from across various instances. You can participate, comment and post in the communities from other instances just as if they were created in the instance you are registered in.
One exclusion is when the instance you are registered with decided to defederate with some instance. For example Instance B is promoting illegal content so your instance decide not to federate with it. Then you won't be able to access the content on Instance B.
Makes sense?