TLDR - you 100% need to diversify or you risk all your domains getting blocked with no warning.
I've used Instantly for about 5/6 months. I was initially super impressed as it's really easy to use and super easy to set up new domains. After about 3 months, about 40% of my domains and all their inboxes got blocked. I initially thought it was something I'd done - turns out a whole bunch of Instantly-provided domains got auto-blocked as being 'spam' and Instantly never told me about it. When I asked their support team about it, they were SUPER difficult to deal with - to the point I'm moving all my infra away from them.
The thing you've heard about their process triggering google flags sounds like what happened to me - basically because they have all their domains in one pool, it only takes a small number of bad actors and Google will just auto-block every domain that's in that pool. One domain starts spamming, everyone gets treated as spam.
The thing that really annoyed me from Instantly is they took zero responsibility for them setting their infrastructure up like this, and just straight up blamed Google. Completely washed their hands of any responsibility or accountability.
If I was starting out again, I would 100% not use Instantly. If you've already started along the road, I would 100% diversify from Instantly. There are a lot of other providers.