Configuration is independent. It only affects a single instance, unless you decide to copy it elsewhere. ServiceNow provides many tools to let a system administrator share configuration (and customization) and data with other instances.
Data can be exported and imported from a list into an XML container. This is often very useful when moving small, discrete data chunks from one instance to another. No validation or automation occurs when you import XML.
Update Sets take the same thought and automate it. An Update Set collects the configuration that you perform and stores it in a named collection. This can be exported or transferred to another system, where the configuration will be replayed, applying the same changes automatically. But Update Sets come with many challenges, including collisions and conflicts.
Applications provide a better way to package functionality. After publishing an application to the Application Repository, you can install and update applications on other instances...