The local Y-axis of the instanced object is mapped to the X-axis of the particle used for the instancing:
1) Before Object Instancing
The particle is displayed as a "Coordinate Cross" with the X-Axis in red pointing upwards. The "Coordinate Cross" at Suzanne shows her "Local Coordinate System" orientation.
2) After Object Instancing
Suzanne is looking downwards since her "Local Positive Y-Axis" is pointing into the direction of the "Positive Y-Axis" of the particle used for instancing her. Only the rotation isn't predictable and has to be adjusted to your needs.
Yes, it's one of those mysteries in this world 😉. I also looking forward to the new start of the particle system. Do you know, when this is planned to happen?
I do not unfortunately. Work on it has been going on for a bit, but the roadmap doesn't show when it will be included: https://developer.blender.org/tag/nodes_physics/