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Shading overrides can be accomplished in multiple ways. In the example file, a simple approach is taken where a completely new Bxdf is assigned to each instance. Fancier ways to vary the shading on each instance are possible with RenderMan for Katana. One such approach is to create a unique "user" attribute per instance. Within your master material, you would create a PxrAttribute pattern that reads the user attribute, and then use the output to drive one of the parameters on the Bxdf.
Further Reading
Instancing in the Katana User Guide. Open it from the Help menu within Katana.