MCR-3667 Improve configuration based instantiation (DO NOT SQUASH)

[toKrause]

Link to jira.

Pull Request Checklist (Author)

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Ticket & Documentation

• The issue in the ticket is clearly described and the solution is documented.
• Design decisions (if any) are explained.
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Feature & Improvement Specific Checks

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  • Yes: Is a migration required? If yes, describe it.
  • Breaking change is marked in the commit message.

Testing

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MCR Conventions & Metadata

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Multi-Repo Considerations

• Is an equivalent PR in MIR required?
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