By using a filter an end-user can quickly locate the business objects they want to action (e.g.: All employees who started work last year).
The Instance List simply displays the list of business objects produced by the filter.
Each business object in the instance list is called an instance.
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As you can see the filter's job is to filter out employees that match the users selection criteria (in this case a surname that starts with B) and then to feed them into the instance list.
You can customize the settings of an instance list using the properties of the business object.