The other commenter is correct but to add to number 3: there is not much difference to them now, but a lot of instances usually have a particular "flavor" to them. Like one might be more geared towards people who are interested I'm programming, others are leftist instances, others are geared towards furries, or music interests.. but that's very broad and you don't HAVE to choose an instance based on that. A lot of new instances have cropped up that are just "catch all" instances for the surge of reddit users. Look at the sidebar descriptions to see if there are any specifics to the instance and see what you vibe with.

In terms of functionality they work exactly the same

Hello I'm a nonbinary/masc leaning lil guy. I work with high risk populations at a non profit in the pnw. Feels weird to not be a programmer or something, seems that's what all the bee-hawers and fediverse users are into these days. Um, I'm autistic and have adhd, in my mid 30s, like to ride my bike, play pikmin bloom, garden, and take up hobbies quickly and then leave them for like 3 years. Oh I am also a really yuge music nerd, like, actually. Mmmmmmmyeap