The central instance is a concept that is unique to SAP. The central instance is a combination of hardware and software. It contains a physical server (the application server) and numerous software components, including a message server, a database gateway (a pre-established connection between SAP and Oracle--or another database), and various update, enqueue, dialog, and spool facility software. In most generic SAP architectures, there are numerous application servers but only a single central instance. However, in addition to managing the SAP interfaces, the central instance can also serve as an application server.
A dialog instance is a software program that is running the SAP kernel and it is the job of the dialog instance to execute the ABAP programs and manage the requests for data and services. While there is generally a one-to-one mapping between an application server and a dialog instance, it is possible to have more than one dialog instance on an application server.
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