Database – A collection of physical operating system files
Instance – A set of Oracle processes and an SGA
The relationship between the two is that a database may be mounted and opened by many instances.
An instance is simply a set of operating system processes and some memory. They can operate on a database, a database just being a collection of files (data files, temporary files, redo log files, control files). At any time, an instance will have only one set of files associated with it. In most cases, the opposite is true as well; a database will have only one instance working on it.
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