Been considering this since the Wastelanders dropped but considering it as a co-op game, now I did see a video yesterday where they said that the co-op isnt really co-op, that if you go to a "dungeon" , its instanced for just you, so you have to all solo them rather than do them co-op/group? Is that truly the case?
No.
The vast majority of locations are not instanced. Only a few locations are instanced, some of the locations that are related to some quests. Those locations are instanced per team, not per player. So if the people you want to play co-op with form a team, they'll all enter the same instance.
But FO76 is a poor choice as a co-op game. It's essentially a single-player game in a single-player engine with some multi-player bits stuck onto it. That's been a big part of the most fundamental flaw in the game - it's trying to combine two incompatible game designs and it's not even using the right tools for an attempt to do that job. The MP parts annoy people who want SP and the SP parts annoy people who want MP. It's a particularly bad fit for MP, both because it's inherently a SP game and the MP parts are an add-on and because the vast majority of Fallout players want an SP game. If you specifically want a multiplayer game, I would not recommend FO76.
The vast majority of multiplayer in FO76 falls into one of these categories:
1) SP gaming being blighted by griefers.
2) SP gaming being negatively impacted by other players having taken things from locations. Was there a note in that location with some lore on it, some story? Where there objects in that location which formed part of environmental story-telling? You can't tell. Maybe there wasn't. Maybe there was and another player picked it up. That's quite a big deal in a game that's designed for exploration and story-telling.
3)
Solo players playing in the same area for an event. They're not a group, they are a number of individuals in the same area. For example, if someone summons the scorchbeast queen many of the players on the server who can handle that fight will fast travel in for it. They won't form a group. They're playing solo in the same place, not playing multiplayer.
4) Solo players emoting to each other. Chance across another player in the gameworld, wave at them. That sort of thing.
5) What might be called something like "light co-op", where a player does something out of consideration for another player without teaming up with them. Most players will heal a downed player if they're nearby, for example. Another common example is what's generally considered good manners with legendary mobs. They drop a legendary item and the drops are instanced per player who has down some damage to that mob. So if there's another player around it's considered good manners to refrain from killing a legendary mob until the other player has done some damage to it, so you can both get a legendary item from it.
And that's it. The vast majority of FO76 players have their microphone off and all other players silenced.
I've played FO76 for over 600 hours since launch and I have been in a team once for a few minutes with one other player and and we were both doing it for reason 5, above. There's a "challenge" to complete an event in a team, so we teamed up for an event (a very short event) to get the in-game currency points for that challenge.
FO76 is fundamentally a solo game. Bethesda do try to force multiplayer, but it's almost entirely a failure. They just binned the "vault raid" feature, which was intended to be forced multiplayer, because of almost total lack of interest from players. Also, a few players soloed vault raids as a super-challenge. I tried it and I failed badly. They were intended for a party of at least 4 high level and well equipped players.