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This element serves as a container for initial instance data.
The instance element has a unique restriction on the single allowed child element: absolutely anything, in any namespace, is allowed, as long as it would make a well-formed XML document if it existed in a separate file. The content is treated as "opaque," which means that even if the child element (or any descendants) contain elements that would normally affect the operation of the document (including nested XForms elements), the elements don't invoke any special processing. The contents of this element are simply data that will be both read and written during form interaction, nothing more.
Instead of inline content, instance may use Linking Attributes (that is to say, src) to point to external instance data. Other than requiring an extra network fetch operation, behavior in this case is exactly the same.