Somehow everything else but instance creation sounds like more prone to automation to me. However, if you're going to go this way: It depends on your automation requirements: If you have an external system that triggers the need for a new instance, the
API seems like a good way to go. If it's triggered from Liferay itself, you probably have some kind of UI, most likely in a portlet. This portlet would use the same API to create a new instance. Or, if you have only an occasional new instance, every now and then (as I perceive as the more common usecase) just use the UI in ControlPanel.
Database Shards, as Sandeep Nair mentions them, are not a good candidate for automation: They're assigned to the different instances "round robin", if you have 2 shards but 3 instances, one of the shards will contain data for two instances. Also, they typically don't solve the problem that you think they solve - I'd go without them. Introducing a new shard to the portal involves a restart. Getting rid of one is a serious operation.
