My office has servers that don't match what you are describing and have 40+ databases on them with little to no performance problems. It really comes down to users & transactions. If you have 1 database with a huge number of users, and transactions, then it could chew up all of the hardware. If however you have 100+ databases where they are only used by 1 or 2 people each, with a very low number of transactions each, then it will certainly work.

I would recommend putting your 10 databases on the server (more if you feel comfortable) and see how your performance stands. If you feel like there is more room, then add another database. If at any point you start seeing pressure somewhere that you can't resolve then you might want to call it good enough, or even pull one of the databases back off the instance.

Also you should note that it won't help to add an additional instance on the same server. They are both going to be pulling from the same hardware so it would actually decrease performance since the instance itself has its own overhead.

We have a few servers where we have put multiple instances on the same server, but we did so for organizational and security reasons. IE we have a DEV and WEBDEV instance on the same server. DEV is for our non web application databases and WEBDEV is for our web application databases.

As with most things SQL Server, it depends. So good luck 😀

Kenneth