Connect: Connects to an instance
Disconnect: Disconnects from an instance (or cancels connecting)
Channel: Input to change the channel (explanation in properties)
Out: Triggers when connected
Out: Triggers when disconnected
Max players: The maximum amount of players allowed in the instance
Channel: People have to connect to the same channel and amount of max players in order to be put together in the same instance. For example there's a connect block with the channel 1 and a connect block with the channel 2. Both have max players set to 2. There are 5 people connected to id 1, and 5 to channel 2. So there are 6 instances (3 fin channel 1 and 3 in channel 2).
Close when reached max players: Players will never be able to join the instance again when it has reached the maximum amount of players. For example the max players is 4 and 4 players join. If someone leaves and joins again, there will be 2 instances in the game, one with 3 people and one with 1. Why would this be useful? Imagine a game where 4 people have to fight each other until the last standing. Then suddenly someone loses connection and leaves the match. It would be weird if another guy replaces him, right?
I actually have been talking with Grazer about this thru email, and some of your ideas are similar to mine.