When is type(instance) different from instance.__class__?

type(instance) and instance.__class__ may be different, even with new-style classes, as Guido mentioned in PEP 3119:

Also, isinstance(x, B) is equivalent to issubclass(x.__class__, B) or issubclass(type(x), B). (It is possible type(x) and x.__class__ are not the same object, e.g. when x is a proxy object.)

For instance:

class A:
    pass

class B:
    __class__ = A

b = B()
print(type(b))      # prints <class '__main__.B'>
print(b.__class__)  # prints <class '__main__.A'>