How do AWS Lambda instances scale?

AWS Lambda functions can be triggered by many different event sources.

AWS Lambda runs each Lambda function runs as a standalone process in its own environment. There is a default limit of 100 concurrent Lambda functions.

There is no need to think of Lambda "scaling". Rather, whenever an event source (or your own application) runs a Lambda function, the environment is created, the function is run, and the environment is torn down. When there is nothing that is invoking a Lambda function, it is not running. When 100 invocations happen, then 100 Lambda functions run.

It "scales" automatically by running in parallel on AWS infrastructure. You only pay while a function is running, per 100ms. It is the job of AWS to ensure that their back-end infrastructure scales to support the number of Lambda functions being run by all customers in aggregate.