Instance is nothing but SQL Server Installation. In SQL Server 7.0 only one installation was allowed and this changed from 2000 Version onwards. Default instance is nothing but connecting to SQL Server using the computer name. Where as the named instance such as Mani will have computername\mani. For example if the computer name is MyServer then the named instance would be MyServer\Mani. Now I can install many number of named instances and the maximum is based on the edition that you use. The list is provided below for each edition.
The port used by default instance is always 1433 and named instances use dynamic allocation.
The total number of instances including the default instance of SQL Server supported by all editions differ. The following gives a clear idea of the supported instances for each editions.
Enterprise - 50
Developer - 50
Standard - 50
Workgroup - 16
Express - 16
Note: Windows Failover Cluster supports only 25 instances.
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