Share extensions became available to developers back in 2014 when iOS 8 was released. Apps that already have the share option enabled include Facebook (Instagram’s parent company) and Twitter, but it took Instagram about two years to finally add the feature.
To use it on Instagram, update to the latest version and then open the app you want to send a picture from. Press the share button and tap on the Instagram icon. A window will open to let you write a caption before posting to Instagram.
One drawback is that you can’t use Instagram’s filter and editing tools unless you open its app. The share extension means that it will be faster to share photos from other image editing apps that also have the feature enabled, however, which is handy for people who like to post several times a day (but a lot of hardcore users will probably think it doesn’t quite make up for Instagram’s controversial and mandatory switch to an algorithmic news feed).