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SQL - What is an SQL Instance? What is an SQL Cluster? Are these related?

What is an SQL instance?
What is an SQL cluster?
The web descriptions are not really clear and don't  give any examples!!!
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Matt V
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What is the rationale for having multiple instances rather than just creating copies of a database? or creating another SQL Server?
I'm trying to determine when to create an instance versus when to just copy the database or install SQL server all over again in a different box?

The answers I found on the web are a bit hazy on the rationale for setting up instances of SQL.
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Hi 65TD:

What is an Active/Passive cluster?
When would you use it?

BT
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