To add to what was previously mentioned by Mihail, your scaling settings may very affect how many instances can spin up in response to traffic.
Using
scaling elements in your
app.yaml, one can limit the number of instances available. For example,
basic_scaling requires one to specify a
max_instances property. Also,
manual_scaling requires one to specify a fixed number of
instances.
If you're using
automatic_scaling, there should not be a limit imposed unless you've reached daily
spending limits that you may have set for your application.
Barring the above exceptions, your application should scale to meet demand when set to automatic_scaling. What remains is to have enough traffic for App Engine to warrant spinning up new instances. Should you feel that your application is not scaling when receiving sufficient traffic, please provide your yaml scaling settings here along with some traffic screenshots from the Developers Console showing an excessive amount traffic that should trigger scaling.
Should you have any additional questions on the subject, feel free to voice them here.