Instagram as we know it now is pretty black and white when it comes to sharing. You either share to the public or you keep it private. People have tried to work around that with the creation of Finstagrams or “fake Instagrams” or private accounts only followed by a handful of their closest friends. But this approach, when more and more people are added to it have its users become less attracted to using Instagram. The social network is hoping to simplify the process of sharing with a select few with its new “Favorites” list. These people are your closest friends whom you’d want to share certain photos, too. Instagram is testing it out with a few users but it’s expected to come to more, if not all, users later on.
Basically, when you make a post and you have this feature, you’ll get an option on whether to share the photo or story with your favorites. These people on your list will have a green “favorites” badge (which is a star) attached to them. You’ll also get a new favorites tab, which is also denoted by a star that shows all the non-ephemeral posts you’ve shared to your favorites. It’ll be like a second timeline. Favorites lists are private and you can add or delete as many friends as you like. No one will know if they’ve been added to or removed from your list but they would see a green badge at the top of your post to signify that they’re on your favorites list. If you remove them, they’ll lose all access to private posts and your favorites tab will appear empty to them.
Source: The Verge