Instance is a server which is what is hosted on lemmy, beehaw, perthchat etc. When you register, you create an account on that server only.

Lemmy is the application that runs on these servers. Other examples of applications that could run instead are Mastodon, Friendica.

The Fediverse is the interconnected network of many servers and instances. You can post on a server that you aren't registered on, as long as they are connected (federated). If you consider all Lemmy sites that interconnect (e.g. Feddit, Lemmy, Perthchat, Beehaw) together as one "website" (a more accurate term would be social network), then from that perspective yes each server acts a portion of that "website".

The fun part is that Mastodon users and users of other Fediverse applications are also compatible, though there are some variations in terminology and methods that are suited for the applications use-case (tooting, crossposting, hashtags, etc.)