Instagram Reels is a section within Instagram that displays videos created by its users. If you open it on your mobile, you would find it by clicking on the middle button that looks like a video player.
An Instagram Reel Ad, on the other hand, is an advertisement that appears in between regular Reels. It looks the same as a typical Reel post, except the Reel ad would have 'Sponsored' written under the name of the Instagram account that posted it.
Apart from the Reels tab, these ads could also appear on the Explore Page and normal Feed of users.
It is one of the newest Instagram Ad Formats in the social media platform's ever-expanding lineup.
With Instagram Reels, you are essentially taking a media format that does well organically and adding an advertising factor to it. As the platform goes through different Reels, the ads are up for your audience to see. Your audience would still be free to like, comment, save, view, or share your content - much like a regular Reel.