Firstly of course, ensure that you have logged in with your Microsoft account to play Minecraft legally with Prism Launcher.
Creating a new instance is incredibly easy. A new instance is completely separate from other instances and data is not shared between instances. This means that you can have 2 billion mods in one instance which uses Fabric, and you could also have a different instance with only 3 mods using Forge. And they're separate and you dont have to go inside your mods folder every time you want to switch Minecraft versions!
A new window will appear where you can change your instance. What I personally love about Prism Launcher is that it is an all-in-one solution. You can either just play Minecraft as if it were the real Minecraft Launcher, or you could even play using