I gathered the following:
In the good old days of single-core processors, it was always preferable to use one instance of a multi-timbral VSTi in the VST Instruments rack. With multi-core processors things has changed somewhat, though. Most* DAWs handle instruments by having one instance access one core (unless the VSTi is multi-core aware, like HALion Sonic SE).
This means that if you have four separate MIDI tracks, each playing it’s own instrument, one core will be tasked to handle all instruments if you use a multi-timbral VSTi in the VST Instruments rack. If you, on the other hand, load 4 instances of the VSTi, each in in it’s own Instrument Track, the workload will be spread over 4 separate cores (provided you use a processor with 4 or more cores).
- Most being the operative word here. I haven’t found any information on how Cubase deals with VSTi’s and cores.
Anyway, from what I can see, the best option is to run Cubase in 64-bit mode (with your computer fully loaded with RAM) and use multiple instances in Instrument tracks. I only use the VST Instruments rack when I find a special reason for it. For example, when I need separated outputs from a drum VSTi.
Users of Kontakt may use the “Purge” option, to drastically reduce the memory footprint.