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How does Instancing Work in Unreal?

I have a few questions about instancing. It seems that each new copy of an object increases the drawcalls. Is there a way to enable some form of hardware instancing for such copies? If multiple meshes are combined into a single object before export, does that reduce drawcalls? I read about InstancedStaticMesh components but I don’t really see how it all works while placing stuff around the world.

Thanks.