It should also be noted that no ref or linesman wants to get hit by a stray punch. As long as the two participants are still thowing punches, its not going to get broken up.
I havent seen too many instigators handed out as of late, either when I play, or when I watch on TV. Generally both of the participants want to fight, so this penality is not used a whole lot.
For penalites, there are a few types (I am not a ref, but a player. This is the best I can recall, and what I see from my view on the ice)
Minor: usual cheating type stuff gets ya two minutes. If a goal is scored by the opposing team prior to the end of the two minutes you get to come out.
Double minor: excessive cheating, but not bad enough to warrant a major penality (subjective decision by the ref) Gets ya four minutes of rest. If a goal is scored during the first two minutes, the penality is then reduced to two minutes. If no goal is scored during the first two minutes, but during the second two minutes, the player gets to come out.
Major: Generally given when intent to injure is present, or for careless play that can result in injury (high stick to head, fighting, ect…). It is a five minute penality. The player is required to sit the entire penality, even if the other team scores 10 goals during that 5 minutes.
Misconduct penality: The player is unavailable for 10 minutes, but does not result in a powerplay if given alone (Without a minor, double minor, or major; which is unusual). Generally you’ll see a player get a penality, and a misconduct penality tacked on. If there is a penality a different player on the same team, who was on the ice when the penality was called, must sit the penality in the box. Game misconduct penality gets you kick our of the game.
Delayed penality: If a penality is called on team A, and team B is in possession of the puck at the time, play continues until team A touches the puck. The idea is to not punish team B by stopping play when they have the puck.
Matching penalities: when players on both teams are given penalites, they sit there time, but there is no power play, and the players in the box cannot exit the box until the fist stoppage of play after the penality ends.
Match penality: ejection from the game, and an automatic 5 minute major must be served by another player.
For more specifics: http://www2.nhl.com/hockeyu/rulebook/index.html
On a side note, the NHL rule book does not call it fighting, rather it is refered to as fisticuffs