Word press MU creates subdomains on your said domain.
Add themes and other users . Then blog away
I put it on one domain by accident and found it pretty useful. I'm making sales from a plattform that I have no idea. how it works.
I read somewhere that with tons of posts. Say 2000 per blog and 80 blogs on the same server. Some where in there its crumbles due to massive queries.
Hope this helps