As you probably already know. Since WordPress 3.0 Multi-Site functionality has been included by default as the WordPress MU project has been merged into the WordPress 3.0 core.

In regards to the initial setup, it might take a little bit of work if you are not familiar with php coding but what I can tell you is that once its setup your essentially good to go. The process of actually being able to offer or add additional subdomains off your root domain take less than 30 seconds to complete by a user.

Let me know if you are looking for anything in specific in regards to this or if you have any follow-up questions.

UPDATED:

Before You Begin - Admin Requirements

If you want to run a network of blogs you should at least have a basic understanding of UNIX/Linux administration. A basic knowledge of WordPress development, PHP, HTML and CSS is recommended as well.

Setting up and running a multi-site installation is more complex than a single-site install. Reading this page should help you to decide if you really need a multi-site install, and what might be involved with creating one. If the instructions on this page make no sense to you, be sure to test things on a development site first, rather than your live site. Server Requirements

Since this feature requires extra server setup and more technical ability, please check with your webhost and ask if they support the use of this feature. It is not recommended to try this on shared hosting.

You are given the choice between sub-domains or sub-directories in Step 4: Installing a Network. This means each additional site in your network will be created as a new virtual subdomain or subdirectory.

• Sub-directories -- like example.com/site1 and example.com/site2
• Sub-domains -- like site1.example.com and site2.example.com

Sub-directory sites

• It works with the use of the mod_rewrite feature on the server having the ability to read the .htaccess file, which will create the link structure.
• If you are using pretty permalinks in your blog already, then subdirectory sites will work as well.

Sub-domain sites

• It works using wildcard subdomains. You must have this enabled in Apache, and you must also add a wildcard subdomain to your DNS records. (See Step 2 how to set up.)
• Some hosts have already set up the wildcard on the server side, which means all you need to add is the DNS record.
• Some shared webhosts may not support this, so you may need to check your webhost before enabling this feature.

WordPress Settings Requirements

• Giving WordPress its own directory will not work in WordPress 3.0 with multisite enabled. It interferes with the member blog lookup.
  • You cannot create a network in the following cases:
    • "WordPress address (URL)" is different from "Site address (URL)".
    • "WordPress address (URL)" uses a port number other than \':80\', \':443\'.
  • You cannot choose Sub-domain Install in the following cases:
    • WordPress install is in a directory (not in document root).
    • "WordPress address (URL)" is localhost.
    • "WordPress address (URL)" is IP address such as 127.0.0.1.
  • You cannot choose Sub-directory Install in the following cases:
    • If your existing WordPress installation has been set up for more than a month, due to issues with existing permalinks. (This problem will be fixed in a future version.)

(See your /wp-admin/network.php for more detail)

Step 1: Backup Your WordPress

Your WordPress will be updated when creating a Network. Please backup your database and files.

Step 2: Setting Wildcard Subdomains

(If this is a Sub-directories Install, skip this step.)

Sub-domain sites work with the use of wildcard subdomains. This is a two-step process:

1. Apache must be configured to accept wildcards.

   1. Open up the httpd.conf file or the include file containing the VHOST entry for your web account.
   2. Add this line:
      • ServerAlias *.example.com

2. In the DNS records on your server, add a wildcard subdomain that points to the main installation. It should look like:

   • A *.example.com

External links:

• Wildcard DNS record (Wikipedia)
• Apache Virtual Host (Apache HTTP Server documentation)

Step 3: Allow Multisite

To enable the Network menu item, you must first define multisite in the /wp-config.php file. Open up /wp-config.php and where it says this:

/* That\'s all, stop editing! Happy blogging. */

Add this line above it:

define(\'WP_ALLOW_MULTISITE\', true);

Step 4: Installing a Network

This will enable the Network menu item to appear in the Tools menu. Visit Administration > Tools > Network to see the screen where you will configure certain aspects of our network. Tools Network SubPanel

Addresses of Sites in your Network

You are given the choice between sub-domains or sub-directories (if none of the above applies). This means each additional site in your network will be created as a new virtual subdomain or subdirectory. you have to pick one or the other, and you cannot change this unless you reconfigure your install. See also "Before you Begin".

• Sub-domains -- like site1.example.com and site2.example.com
• Sub-directories -- like example.com/site1 and example.com/site2

Network Details

These are filled in automatically:

• Server Address - The Internet address of your network will be example.com.
• Network Title - What would you like to call your network?
• Admin E-mail Address - Your email address.

Double-check they are correct and click the Install button. You may receive a warning about wildcard subdomains. Check Setting Wildcard Subdomains.

Warning! Wildcard DNS may not be configured correctly!

The installer attempted to contact a random hostname (13cc09.example.com) on your domain. To use a subdomain configuration, you must have a wildcard entry in your DNS. This usually means adding a * hostname record pointing at your web server in your DNS configuration tool.

You can still use your site but any subdomain you create may not be accessible. If you know your DNS is correct, ignore this message.

Step 5: Enabling the Network

The rest of the steps are ones you must complete in order to finish.

Tools Network Created.

1. First, back up your existing /wp-config.php and /.htaccess files.

2. Create a blogs.dir directory under /wp-content/ - This directory is used to stored uploaded media for your additional sites and must be writable by the web server. They should be CHOWNed and CHMODed the same as your wp-content directory.

3. Add the extra lines your WordPress installation generates into your /wp-config.php file. - These lines are dynamically generated for you based on your configuration. Edit the /wp-config.php file while you are logged in to your sites admin panel. Paste the generated lines immediately above /* That\'s all, stop editing! Happy blogging. */. Remove the earlier placed define(\'WP_ALLOW_MULTISITE\', true); line only if you wish to remove the Network menu in the admin area. You may choose to leave this to be able to access the /.htaccess rules again..

4. Add the generated mod_rewrite rules to your /.htaccess file, replacing other WordPress rules. - These lines are dynamically generated for you based on your configuration. (If there isn\'t one, then create it.)

5. Log in again. - Once the above steps are completed and the new /wp-config.php & /.htaccess files are saved, your network is enabled and configured. You will have to log in again. click "Log In" to refresh your Adminstration Panel. If you have problems logging back in, please clear your browser\'s cache and cookies.

Step 6: Super Admin Settings

You will now see a new menu section called Super Admin. The menus contained in there are for adding and managing additional sites in your network. Your base WordPress install is now the main site in your network.

Go Super Admin > Options panel to configure network options, and then create sites and users.

Things You Need To Know

Here are some additional things you might need to know about advanced administration of the blog network.

• WordPress Plugins - WordPress Plugins now have additional flexibility, depending upon their implementation across the network.

• Site Specific Plugins - WordPress Plugins to be activated or deactivated by an individual blog owner are stored in the plugins directory. You need to enable the Plugins page for individual site administrators from Network > Options.

• Network Plugins - WordPress Plugins stored in the plugins directory can be activated across the network by the super admin.

• Must-Use Plugins - Plugins to be used by all sites on the entire network may also be installed in the mu-plugins directory as single files, or a file to include a subfolder. Any files within a folder will not be read. These files are not activated or deactivated; if they exist, they are used.

• Categories and Tags - Global terms are disabled in WordPress 3.0 by default. You can use the Sitewide Tags WordPress Plugin or other similar Plugins to incorporate global tags on the portal/front page of the site or on specific pages or blogs within the network to increase navigation based upon micro-categorized content.