Is there a limit to the number of instances and databases that should be operating under one db2 binary? Or is that limit simply dictated by cpu/memory available and has nothing to do with how many db2 binaries are on a box. Is some degradation of performance expected with say 9 instances and 45 databases on one db2 binary?
I do not think that is a specific limit. You will need to check the documentation for the version and OS you are using. For the most part, CPU and memory play a big role it what you can do. If the databases are small, them having a lot of them on on system is not a big deal.
For DB2 LUW, I really do not see the need for multiple instances on the same server. A single instance is perfectly capable to handle lots of databases under it. I would think that maintaining multiple instances on the same box would be more of a hassle than anything. Applying a Fixpack would have to have every instance upgraded at the same time, for example.