What is difference between widget and widget instance?

A Widget is the code template used to display content in the portal. A Widget Instance is created when a Widget is added to a Page.

Every time a Widget is added to a Page it creates a new Widget Instance. Each Instance can be configured separately, allowing the same code template to be applied to different configurations. This allows a single Widget like the Simple List Widget to render multiple different types of content like a list of Incidents, a list of Links, or a list of Change Requests.