Most of the monsters (mobs) you will fight in instances will be elite. That means that they have higher hit points and more devastating attacks than normal mobs of their level. Elite mobs can be recognized by a gold dragon around their character portrait. Most instanced require full groups of five characters at the appropriate level or an escort by someone significantly higher. Instances have several bosses, each of which have special abilities. More experienced players can tell you what to expect or check the links above.
Wowhead, and other databases present loot tables that show which gear is dropped from specific characters. Be sure to check the links above to see if there's something in particular you would like to have. The boss mobs usually drop superior quality loot. The names of these items are printed in blue and often say "bind on pick up" under the title. This means that once the item is in their inventory, the player cannot pass off the item to another character. They can only discard, vendor, or disenchant it.
The etiquette of instance loot
You will be given the option to need, greed, or pass an item. In most cases you should only pick "need" if the item that dropped is appropriate to your class and better than your current gear. If you need a piece of gear, click on the die icon in the pop-up window. Conventions on greeding and passing vary among groups. In many cases players who do not need an item and would only sell it to a vendor select greed by clicking on the pile of coins. If someone in your party states that they need an item, it is genial to click the X to pass it.
If everyone opts to pass an item, you may be told to "roll" on it. Type /roll to generate a random number between one and one hundred. Whoever has the highest roll is entitled to pick up the item. If there is an enchanter in the group, they may pick up the item and disenchant it. In most cases the enchanter does not keep the shard provided by the disenchant ability. Everyone rolls and whoever is highest is given the enchanting created from the disenchant. This practice also varies from group to group. As a courtesy if I win a roll, I ask the enchanter to keep the shard.
Instances are important for loot and leveling, but they also help you to learn important aspects of how to play your class. Next time I will address the roles you will be expected to play in an instance.
EDIT: Spelling corrections for great justice. Thanks for the comments! <3 Amanda