The instancing system is meant to be completely fluid and depending on distance according to the DDF.
No, it's much more complex than that. While you are correct that each instance/bubble/island is for all players within a certain distance of each other (typically radar range), you are very likely to get multiple instances at the same/similar location due to issues like:
* Limited number of players per instance.
* Different players having different internet bandwidth.
* Different players being in different parts of the world (you don't want someone in England & Australia to be in the same instance as the lag would be terrible).
There will be MANY instances (bubbles) at popular locations like Resource Extraction Points, Stations, etc.
That's why you can't have a system-wide chat & just expect to be able to meet-up with anyone you speak to. That's why I proposed a "locate transmission source" mechanic to hide this fact in a believable & workable way.