Why do baking recipes call for instant coffee instead of fresh ground coffee?
Fresh ground coffee requires some sort of brewing process to extract the flavor, generally extended time in hot water. If you just dump some into a cup of warm water, you won't get much out of it - some wet grounds and some slightly coffee-ish water. Same goes for baked goods: coffee grounds won't efficiently release their flavor. If you brew it first, you'll have to add a lot of liquid in order to get enough coffee flavor, likely more than the recipe called for in the first place.

Instant coffee, on the other hand, is designed to dissolve and release all the flavor. Used in baked goods, the same thing happens. Sure, the coffee flavor itself isn't as good as you'd get from real coffee, but you get all of it. It also happens to be much easier!

The main alternative is to use espresso; the flavor is much more concentrated, so a recipe may be able to replace some of its liquid with espresso and get enough flavor out of it, without throwing off the recipe.