Instabilities of uniform states are ubiquitous processes occurring in a variety of spatially extended nonlinear systems. These instabilities are at the heart of symmetry breaking, condensate dynamics, self-organisation, pattern formation, and noise amplification across diverse disciplines, including physics, chemistry, engineering, and biology. In nonlinear optics, modulation instabilities are generally linked to the so-called parametric amplification process, which occurs when certain phase-matching or quasi-phase-matching conditions are satisfied. In the present review article, we summarise the principle results on modulation instabilities and parametric amplification in nonlinear optics, with special emphasis on optical fibres. We then review state-of-the-art research about a peculiar class of modulation instabilities (MIs) and signal amplification processes induced by dissipation in nonlinear optical systems. Losses applied to certain parts of the spectrum counterintuitively lead to the exponential growth of the damped mode themselves, causing gain through losses. We discuss the concept of imaging of losses into gain, showing how to map a given spectral loss profile into a gain spectrum. We demonstrate with concrete examples that dissipation-induced MI, apart from being of fundamental theoretical interest, may pave the way towards the design of a new class of tuneable fibre-based optical amplifiers, optical parametric oscillators, frequency comb sources, and pulsed lasers.