After installing the below product recommendation modules on our magento instance, we were able to resolve the above issue. Now the DataServicesStorefrontInstanceContext query is giving proper the response.
1) composer require magento/product-recommendations
2) composer require magento/module-page-builder-product-recommendations
3) composer require magento/module-visual-product-recommendations
and then installed
4) composer require magento/module-data-services-graphql
ref : https://developer.adobe.com/commerce/pwa-studio/integrations/product-recommendations/
Note : After installing the above modules, we have to execute the below commands
php bin/magento setup:upgrade
php bin/magento setup:static-content:deploy -f
php bin/magento cache:flush
php bin/magento cache:clean