To maintain a reliable performance, developers cut much of the elaborate, data-rich animation, such as cube transitions and the AR filters people can apply to faces. But they kept the less data-demanding stuff like GIFs and stickers.
Additionally, they put an emphasis on video and messaging, which remote residents use more frequently than their urban counterparts.
So Lite seems to be a deliberate outreach to people with entry-level devices and/or live in areas where connectivity is often unstable and network speeds are slower. Instagram and its parent Facebook are eyeing the fact that emerging markets will account for over 90% of new mobile subscribers globally.
Instagram Lite is now rolling out in 170 countries on Android. There seems to be no mention of when (or whether) it will arrive on iOS.