Should material GPU instancing be enabled in Unity?

There shouldn't be any harm in enabling it because the associated shader variants are included in the vanilla game. As to whether it will improve performance:

• At the time of writing (2023-02-13), the only feature which directly uses instancing is grass/foliage. That being said, this may change in the future depending whether it is more beneficial to generate a non-instanced mesh with all of the foliage instances in a grid cell. The current benefit of instancing grass is to cut instances and adjust density without any mesh generation overhead.
• If several identical mesh renderers are placed nearby Unity may automatically render them using GPU instancing. For example identical trees tend to be automatically instanced. It's probably worth enabling instancing to potentially benefit from this.

For more information please refer to the Unity documentation here: GPU instancing