Hi CumQuaT.
Like WLGfx says, my understanding is that instancing tells the renderer to draw an object more than once (position and draw, re-position and draw again, re-position and draw again, and so on).
Instancing an object is much faster than cloning as well, so that means faster load times. Creating/deleting instances is usually fast enough to be performed in real-time, which is something that you usually shouldn't do with cloning.
Quote: "I believe you can scale as well, not sure though."
Yes, instanced objects can be scaled however you want.
Quote: "But one change does all...."
Actually instances can each be scaled independently without effecting the others. The main problem that I have run into is sometimes when the master (parent) object has it's visibility altered (excluded/hidden) some of the instances are effected as well (been a while, may have been fixed). If you run into that problem, an easy work around is to just keep the master object hidden away, and only use the instances in your world.
Quote: "Just the same speed really on rendering, with little difference."
Actually (at least from all of my own tests) instancing does produce a speed increase. Not really sure why, but mabey it is also able to re-use some of the object's matrices?
If you want to setup physics for an instanced object, you have to clone the object, set up it's rigid body, delete the object (while leaving the rigid body), and re-instance the object using the same object ID. That was once true for sparky's collision as well, but it now supports instanced objects without any extra work.
Animated objects (like characters) shouldn't be instanced, since they will all display the same frame as the parent object.