"Pipe down" is (or used to be) the last pipe of the day made at the start of silent hours (normally 2230 or 2300). The next one, except in an emergency, was "Call the hands" at 0600 or 0630 followed, I think, by "up hammocks".

Its meaning is, of course, 'shut up and go to sleep' and it's in this context that it's used as a general admonishment to shut up.

(The instrument, btw, is the boatswain's call; pipes are the signals made using it).

Steve