Question

What are the advantages and disadvantages of having a single instance compared to multiple instances when multiple databases are intended to be created?

Answer 1

You may want to browse the Oracle concept guide, especially if you’re more familiar with other DBMS.

• A database is a set of files, located on disk, that store data.
  These files can exist independently of
  a database instance.
• An instance is a set of memory structures that manage database files.
  The instance consists of a shared
  memory area, called the system global
  area (SGA), and a set of background
  processes. An instance can exist
  independently of database files.

A single instance (set of processes) can mount at most one database (set of files). If you need to access multiple databases, you will need multiple instances. More on the difference between instances and databases on askTom.

Ideally, you only want one instance per server (the server may be a logical server — i.e a virtual server). This will allow Oracle to know exactly what is going on. This implies one database per server.

If your databases are really independent, going with multiple instances/databases would make sense, since you have greater control over DB version, administration, etc.

If however your databases are not really independent (you frequently share data across them, you need some common data accessible to all of them), it may be more efficient (and simpler) to go with a single consolidated database. Each original database would have its own set of schemas. In this case cross-schema referential integrity would be easy, you wouldn’t need to duplicate the data that needs to be shared.