Most accessible areas can be entered by all available players together. However, certain areas are closed off due to maintain a certain challenge. These areas are called Instances and instead of being accessible to everyone, they are separately instanced for each player and its Party, hence the name. Missions involving Shardships, Join-A-Crew travel and certain Dungeons and Areas will be Instances.

Source: Official Site - TCOS Manual (link no longer works)

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