There is nothing inherently wrong with hosting multiple application databases on one instance, but each application may have caveats. I think the most we can really advise on are personal experiences where this has become a problem.
For example, if the application is expecting a specific Login to exist with a specific password, but that password is different between application instances, you're going to run into an issue.
Also, if you determine one of the instances of the application benefits from an instance specific setting, but it also hurts the performance of one of the other applications, you're going to have some friction.
If you have the benefit of contacting a vendor to see if they have an opinion on this, it is probably well worth your time to do so.