The point of that is that it is a big part of Object Orientation. Everything needs to have an instance, you simply cannot use the class name itself to reference the object, but its instance. This gives a huge advantages. You can create multiple instances of each class, which beats procedure oriented programming in every aspect.
If you want to know more (Im sure you do :)) then just search http://www.google.com for "OOP".
In your example code you create a new instance of Form1 object. I assume thats not what you want. If not say and I will provide you with an example to use the instance of Form1 you already have in your Form2, assuming you show Form1 first :).