Instant coffee- what the eff is it?

So I'm just looking for some enlightenment on the whole topic. Not trying to glorify instant coffee because to be quite honest, I have no desire to try it. Especially the Sbucks stuff. My room mate recently bought it. I didn't care because I expected instant coffee to be...ugh. Now he raves about it. Claiming for instant coffee it isn't bad. I asked him how it works and he showed me. Hot water and then you pour the grinds from the package into the cup of hot water. Seems like a smart marketing move especially in an economy like ours. People (some not all) seem to think cutting corners like buying Instant coffee will save them money. Which that is probably true but I don't think you can replicate good coffee at a cheap price. ANYWAYS how the heck does this instant coffee work? The grinds dissolve in the water...what the eff...thats weird. Can someone explain this? My room mate was trying to tell me that it's "Arabica beans" but I told him thats not anything new. Thanks guys

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