The instantaneous reading is calculated over a very, very short period of time/distance. The average mpg is calculated from the last time you zeroed the reading until you reach a mileage limit (that tends to vary among the manufacturers). Your owner's manual may or may not tell you what that limiting distance is. For example, if you never reset the gauge you may always be seeing the average for the last 200 miles (or whatever the limit is). Unless you've had your computer re-programed the change in tire size will not have been factored in. Check highway mileage against mile markers to see the impact.
