I found this on the Wiki as a function of the Teleport service, but I can't find much documentation on it. How is this different from the normal Teleport function?
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What is Teleport To Place Instance?
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When entering a game on Roblox, you are entered into one of potentially many servers, each of which supports a limited number of players. A "Place Instance" refers to one of those servers. The function lets you teleport a player to a specific server, rather than "any open server".
Wiki link: TeleportToPlaceInstance
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This makes sense. So like TeleportToPrivateServer but to a public server instead? Could I generate a new server to send the players into like with the ReserveServer function?
Correct.
How would I generate that server, and where would I get the ID for it? The wiki doesn't offer much information other than the JobId property can provide the current server's InstanceId.
All the functions you need are here: http://wiki.roblox.com/index.php?title=API:Class/TeleportService You ReserveServer, then you TeleportToPrivateServer. You might use the TeleportToPlaceInstance with GetPlayerPlaceInstanceAsync, if you're just wanting one friend to teleport to another friend's server.