If you have one blog, installing and launching WordPress is pretty straightforward. If you intend to launch a network of blogs, however, it can be tedious to have to install WordPress multiple times for a number of sites. Furthermore, once you have the sites deployed, you will need to manage and maintain each one separately. The WordPress multisite feature may be exactly what you need.
With multisite, you can essentially install one instance of WordPress that can spawn an infinite number of sub-sites that are connected to the main one. Just as WordPress.com allows users to create their own sites, you could setup your own blog creation service. Alternatively, if you want complete control of new blog creation, you can restrict blog creation but still have the ability to create new sites seamlessly and easily.
Each site within your network will be a virtual site that uses either a subdomain or subdirectory, depending on the settings you specify. Unlike creating an independent blog, a virtual site will not actually use their own directories on your server. Furthermore, virtual sites cannot install their own themes and plugins, but they can activate any themes or plugins you install administratively.
You should also know that these virtual sites do not have separate databases. Essentially, there are sites within the primary site. The only separate features they will have are their own media uploads directories and their own distinct tables within your database.
Whether you are launching a contributor-driven magazine or simply want to offer a blog creation service to members of your organization, the WordPress multisite feature may be an ideal solution. For complete instructions on installation and setup, see the online WordPress documentation.