The 'type instantiation is excessively deep' error in TypeScript occurs when the type system tries to evaluate a deeply nested or recursive type and exceeds its evaluation limit. This often happens with recursive type definitions or overly complex generic constraints. To resolve the issue, you can simplify or flatten the type structure, breaking it into smaller, more manageable types. If you’re working with recursive types, introducing base cases or using conditional types to limit recursion depth can help. TypeScript has a limit on the depth of types it can evaluate, so reducing type complexity ensures the compiler doesn’t hit this limit, allowing your code to compile without errors.