I think your last sentence is not necessary and could actually be confusing. PBS_SERVER was ALWAYS the name of the cluster, not a server instance. For example, in a traditional failover setup, the two instances of pbs servers have different names depicted by pbs_primary and pbs_secondary, yet the PBS_SERVER value is the same (demonstrating the fact that that switch always stood as a representation of the entire cluster, and not a server instance). There are some sites who configure a non-host name as PBS_SERVER when they have a failover setup as well.
Besides, in the case of a single server configuration (in mutli-server), the code could deduce that the internal value of PBS_SERVER_INSTANCES (if not specified explicitly) is based on PBS_SERVER - no?