Are these applications production are development (or both) ? Will the applications communicate with each other or are they isolated from each other ? What are the hardware specs for the server and what are the resource specs for the applications (number of concurrent users, type of queries ...) ?
With that being said, I will assume that these are either both production or development applications - If you run both applications under the same instance, you will have greater performance benefits - however, less fault tolerance since an instance treats all databases effectively as one with resources, logging ... If one application has a long transaction which freezes the instance both applications will stop. Most companies will run both applications under the same instance since problems like these are controlled through good design.
The database question revolves around what the applications are and how much interdependency exists - but normally seperate databases. However, since you are asking about putting these 2 applications under 2 instances - it is safe to say to create 2 seperate databases.