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Why do instances not run ads?
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I think it's reasonable for some instances, where there's good alignment. There was a thread I replied in a few days back around how/if TTRPG creators(who are mostly small enthusiasts themselves) could advertise in related magazines, and legitimizing that business wouldn't really pose a conflict for the hobby - that's how it was built in the first place! It's just a matter of finding a place for it and defining the technical solutions.
As a general "let in all the advertisers and promise riches for someone" measure, it does cause known problems. There is some freedom to figure out what works in a specific case here, it's not defined top-down since it isn't centralized.