Despite writing a whole chapter about instinct, Darwin states this right away, "I will not attempt any definition of instinct," (Darwin, 225) because apparently everyone understands what instinct is. If you're unsure, for purposes of this chapter it is inherent knowledge that does not need to be taught (eg, the location of ancestral breeding grounds, how to make a nest, etc).
Darwin muses on the similarities of instinct and habit for a bit, wondering if habits eventually become instinct. This to me seems slightly like the modern concept of the meme, but memes in my opinion cannot be instinctual. Darwin applied the concept of gradual change to the acquisition of instinct as well, and that complex changes don't spring up over one generation.
Darwin also brings up the idea of extra-species altruism, though he doesn't explicitly call it that. "The instinct of each species is good for itself, but has never...been produced for the exclusive good of others," (Darwin 227). Species do benefit other species but it is usually for some sort of gain, whether or not that gain is visible or understood. This again relates back to the theme that there is a great deal of interconnected dependence between different species, which has been repeated throughout Origin.
Instinct hasn't been cracked yet (a brief google search reveals more movies and phones than scholarly discussion) and the nature vs. nurture debate still rages strong. Therefore, Darwin's assertion that instinct is selected for probably isn't off the mark. Many things have a biological basis, even if it's not immediately clear. If animals are born "knowing" something, the simplest explanation is that it's biological. If it is solely biological then selection most certainly applies. Sociobiology seeks to study the link between genes and behavioral traits.
Darwin gives three examples of natural instinct: cuckoos laying their eggs in other nests to pass off parental investment onto another bird, ants' "slave-making", and bees making honey combs. I get the cuckoo thing, and the bees, but the ants section doesn't really make much sense to me. Admittedly I know nothing about ants apart from what I've seen in A Bugs Life...so really, I know nothing. Apparently Formica sanguinea, a type of ant, takes slaves (other species of ants). Even Darwin seemed skeptical of this ant species (to the point of putting a few colonies in his yard to observe), but apparently they take over other species nests rather than building their own (Sonobe, R. Onoyama, K http://ant.edb.miyakyo-u.ac.jp/E/Taxo/F80701.html).