What is the difference between parameters and instances

Answer 1

parameters is values hat you passed to function and that is in function declaration and instance is another name for the object, for example if you have set method:
class Test
{
private int n;

public void setNumber(int n)
{
this.n = n; /* this.n is instance of object for which you called this method and n is parameter of function */
}
}

Answer 2

They are not comparable...
An object is an instance of a class.
As such

Test a = new Test(); // creates a new instance of the class Test

A method may has some parameters which will be shown in the method's signature.

void method(int b) {} // b is a parameter