Extremely unstable analogReads

Either you misunderstood or whomever told you that is mistaken. The default analog reference can change with load on the power supply because the default reference is Vcc. The 1V1 internal analog reference is stable, but its initial value can be ±0.1V. So, for instance the 1.1V internal reference can be 1.0V to 1.2V. To be accurate, measure the analog reference and use the measured value in computations. The reference voltage will be stable at the measured value even if Vcc varies. There are other values of internal Vref for other procesors. See the analog reference page.

That said, an external reference can be more accurate.