Well firstly you should have dev/test completely isolated from any other environment. Unsure what instance 3/4/5/6/..../n are all for but if any are production then I would highly fight to get prod isolated from anything else.
As for is it possible, yes it is, you simply check / uncheck the instances to not patch in the installer.
Is it OK, well that is the $1,000,000 question. SQL 2016 is now out of support so you need to get to SP3 as soon as possible in order to maintain the extended support as anything not SP3 the first thing will be to patch it due to the product lifecycle.
If instance 3/4/5/6/.../n are production then yes I would advocate to install SP3 in a piecemeal process to verify compatibility but I wouldn't wait to long to do so and put your plan in place to patch the remaining instances ASAP.