I got this one wrong because I referenced this from BOL
"You can run only one instance of SQL Server on each virtual server of a SQL Server failover cluster, although you can install up to 16 virtual servers on a failover cluster. The instance can be either a default instance or a named instance. The virtual server looks like a single computer to applications connecting to that instance of SQL Server."
From the page titled "Multiple Instances of SQL Server".
What threw me for a loop was the change in terminology. It says you can only have one instance per virtual server in a cluster. But you can have 16 virtual servers.
The configuration mentioned in the question said 2 nodes so I thought the answer was 2.
Oh well go with my gut instinct next time.