I just got the quest in Avalon where you defeat the pendragon and two other dragons but the next quest is an instance quest and has me defeat the same people with additional others. Basically why do you do it again and what’s an instance quest
An "instance" is a special section of the game that is sort of like being in a private space instead of a public one. In the streets or some bosses, anyone can join the battles at any time. But in an instance, you (and up to three other people) go onto a sigil and enter a dungeon that you have to yourselves. No one else can come in during that time.
As for Avalon and the Pendragon...
If I recall correctly, you defeat the Pendragon in the present, but that isn't enough to free the land of Avalon.
In order to save everyone you have to go back in time to defeat the Pendragon when he first came to be. That's the end-game "instance" or, if you prefer, the final dungeon. Once you've defeated the Pendragon a second time, you have saved Avalon.