To answer this question, a more basic question to ask would be what is a BizTalk host, since a host must exist before an instance of it can exisit! 
This distinction may be confusing to BizTalk newcomers because when navigating through the BizTalk Admin Console, hosts and host instances are viewed separately.
In mid-90's techno-speak, (READ: about the time-frame where the development of the BizTalk/Commerce Server got its start) the host would have been thought of as a container for related adapter handlers, pipelines, receive locations and orchestrations. Since an enterprise's BizTalk configuration or implementation can span over multiple physical servers, grouping logical units of work tied to an abstract host allows instances of defined work to span servers. So, think of a host instance as the physical implementation of the logical grouping of work. For example, if a multi-national retail chain wanted to process its outgoing purchase orders, a likely BizTalk implementation would include instantiating multiple instances of a defined purchasing host across several physcial servers.
To read more about hosts and host instances, check these links out!
http://msdn2.microsoft.com/en-us/library/aa561042.aspx
http://geekswithblogs.net/toddu/archive/2004/10/02/12050.aspx