32 is the theatrical limit but the current Alpha probably isn't reaching that yet. Having said that instancing is a large subject. The 32 limit doesn't include npcs. In the Alpha there is a scenario called "ethics & credits" which takes place over a large asteroid field and its quite possible to fly between instances (as I understand it) so the 32 limit isn't something you should think of in terms of traditional arena style games.
There is only one flyable ship in the Alpha; the Sidewinder. Its a classic ship and quite maneuverable but very small. We have already seen the Anaconda which is larger and appears to have multiple bridges which will by flyable in the final game, however the larger ships will probably be the huge Panther clipper type friggets. Frontier have also released
concept art of the Cobra (original Elite ship made by the same manufacturer as the Sidewinder) cockpit which they have hinted we may see soon. There will be 25 ships available for purchase in the released game and more in possible expansion packs. In Elite the tradition is to start with nothing but a small ship and some credits and make your way in the game universe.
There hasn't been an official word on modding and no idea yet about community designed vessels.
Oh..and they have said there will be some kind of FPS experience that allows you to board other vessels and stations but it will probably be part of a future expansion as with seamless planet landings.
