GW Instances

Ok. So i know when you leave a town or outpost you are sent to what's called an "instance" which is basically you hosting the current map.
But i'd like to know a bit more detailed how it works as it could possible stop some laggy sessions.

1) Does whoever the party leader is become the host?
2) Does it select the person with the best ping?
3) Does anybody know?

The instances are all hosted on Anet's servers.

Where did this leader hosts crap come from, not aimed at you Sakashi, but this has come up a few times lately and I''m curious as to who started it. Anet hosts all, and will never be self hostable for security reasons.

that i can answer by simply noting the huge number of games that are like that and people will assume that this follows the same beaten path

I've always been under the impression thats how it worked. Each and every little instance being hosted on the users machine to save money on bandwidth costs to help keep GW free.
Oh well i'll be less reluctant to be party leader now. ^_^

Yep, our servers host all gameplay that occurs in Guild Wars. Your client is actually pretty stupid when it comes to playing the game; the client is really only a program that allows you to see what is going on. The servers do the rest. That's one of the reasons why Guild Wars is as secure as it has proven to be.

There's a great set of articles written by ArenaNet's founders on the ArenaNet website. In particular, the one about Cheats and Cheat Prevention is well worth reading.