Is it better to have a high prestige/status instructor write the letter even if they don't know me as well, or is it better to have a lower-ranked instructor write it if they know my abilities better?

Remember, these letters should be as personalized as possible. A letter that begins, "I don’t know this student very well…" will not help in admittance to a graduate program. It is better to have a strong, personalized letter from a junior faculty member than a mediocre letter from a senior person who really doesn’t know you.