>Thanks - so - it seems - the basic purpose of MTDLL is to reduce the number of server instances.

The basic purpose of MTDLL is to eliminate blocking issues. With a single-threaded DLL, if one thread executes a long-running query (or whatever), the other threads are blocked from executing. MTDLL eliminates this because all threads can execute simultaneously. The benefit of MTDLL is best seen on multi-proc boxes, of course.