The instance number begins at 1 when you publish a form. If you want to start back at 1, you will have to save your form as a new form and publish it. There is no maximum number of instances.
If you want to assign a specific number, use instance name. It can be sequential based on instance number too. Check out the page in the help guide about setting the instance name: /Documentation/manual/html/?form_instance_name.htm