Just a little clarification with the "instance" for those who don't know what we are talking about. When you load the game in open, you are basically put in a group of other players in the open. IIRC, that number of players is limited to 16. I think it has to do with the network design, where FD decided to use a peer-to-peer network architecture instead of a traditional client-server architecture. This is how the information happening in the game is related to you, everybody is sharing the information so that everybody has the same information. In a client-server architecture, the server is the central point that distributes the information to all clients.
As for instancing, well, you only get to see the people who are in the same "group" than you. In the example above, those players that were doing the blockade were probably not going to be bothered while their instance group was at its maximum. So, you would fly where they are supposed to be and you wouldn't see anyone.
I'm not totally sure if the number of people in one instance is caused by the peer-to-peer network architecture. I played WoW for several months with a friend and we never failed to meet at any point, anywhere in the game. The WoW network architecture is client-server.