So you ramped up a development instance, used it heavily, crammed a bunch of testing into it and now you want a clean fresh start. The following is how you delete a development or sandbox instance of CRM Online.
Switch or delete an instance of CRM Online
https://technet.microsoft.com/library/dn531078.aspx#BKMK_SwitchDelete
Switch an instance
https://technet.microsoft.com/en-us/library/dn896590.aspx
Delete an instance