I think the answer to the following question will provide you some insight to your questions.
http://stackoverflow.com/questions/2676603/how-do-attribute-classes-work/2677153#2677153
Here is a repost of the answer I provided.
Attributes are essentially meta data that can be attached to various pieces of your code. This meta data can then be interogate and affect the behaviour of certain opperations.
Attributes can be applied to almost every aspect of your code. For example, attributes can be associated at the Assembly level, like the AssemblyVersion and AssemblyFileVersion attributes, which govern the version numbers associated with the assembly.
[assembly: AssemblyVersion("1.0.0.0")]
[assembly: AssemblyFileVersion("1.0.0.0")]
Then the Serializable attribute for example can be applied to a type declaration to flag the type as supporting serialization. In fact this attribute has special meaning within the CLR and is actually stored as a special directive directly on the type in the IL, this is optimized to be stored as a bit flag which can be processed much more efficiently, there are a few attributes on this nature, which are known as pseudo custom attributes.
Still other attributes can be applied to methods, properties, fields, enums, return values etc. You can get an idea of the possible targets an attribute can be applied to by looking at this link
http://msdn.microsoft.com/en-us/library/system.attributetargets(VS.90).aspx
Further to this, you can define your own custom attributes which can then be applied to the applicable targets that your attributes are intended for. Then at runtime your code could reflect on the values contained in the custom attributes and take appropriate actions.
For a rather naive example, and this is just for the sake of example :)
You might want to write a persistence engine that will automatically map Classes to tables in your database and map the properties of the Class to table columns. You could start with defining two custom attributes
TableMappingAttribute
ColumnMappingAttribute
Which you can then apply to your classes, as an example we have a Person class
[TableMapping("People")]
public class Person
{
[ColumnMapping("fname")]
public string FirstName {get; set;}
[ColumnMapping("lname")]
public string LastName {get; set;}
}
When this compiles, other than the fact that the compiler emits the additional meta data defined by the custom attributes, little else is impacted. However you can now write a PersistanceManager that can dynamically inspect the attributes of an instance of the Person class and insert the data into the People table, mapping the data in the FirstName property to the fname column and the LastName property to the lname column.
As to your question regarding the instances of the attributes, the instance of the attribute is not created for each instance of your Class. All instances of People will share the same instance of the TableMappingAttribute and ColumnMappingAttributes. In fact, the attribute instances are only created when you actually query for the attributes the first time.