I'm not sure of the answer exactly, but
I sometimes hold her and kiss on the cheek together with a soft hug. However, I have the feeling that such action does not have any effect on her...
If you look at mammals in general, facial licking is practiced as a means of communication by (those without hands) from soon after birth onwards. It is likely that you get a small rush of neurohormones that mediate social bonding - oxytocin and vasopressin - when you put your baby's face to yours and coo, kiss, soothe, or other. Same with the hug. Your daughter also gets some neurohormone release: oxytocin also decreases stress. So, this behavior is very important to both of you, and nurtures a pair-bond and trust, among many other things.
It is so important that the genes for oxytocin and vasopressin - ancient genes - display a marked conservation in structure and expression. Mutations decreasing the neuroregulatory functions are not tolerated, but there are some mutations in higher social aminals, i.e. in New World monkeys, that seem to correlate with male paternal care. Decreased amounts are found in some mental illnesses. So keep up the good work.
Unfortunately, searching the literature for preschoolers and understanding of kisses nets a lot of information about sexuality, abuse, and other unhelpful topics.
Is it an instin[c]tive action or something they learn from the context?
Chimpanzees and other non-human primates kiss to comfort, recognize, placate, etc. This activity begins early. The presence of kissing in non-human primates and facial licking in animals, and the release of oxytocin during such activities clearly points to an instinctual context. Clearly it is also refined socially. That's the best I can do.
Neuropeptidergic regulation of affiliative behavior and social bonding in animals
Oxytocin, vasopressin, and the neurogenetics of sociality.
Evolutionary pattern in the OXT-OXTR system in primates: coevolution and positive selection footprints.
Oxytocin, stress and social behavior: neurogenetics of the human oxytocin system
The first kiss: Foundations of conflict resolution research in animals