WordPress Multi-User is a blogging platform for multiple people to create individual blogs on the same platform. The main site is allowed have a custom front page that can show recent blogs, posts and users.   It’s a platform specifically for people (who can be complete novices)  to blog separately.  These seperate novice users can even be empowered to completely customize their own websites (blogs), change the colors, features, plug-ins, etc. If you want to create let’s say 10-20 blogs with separate blogs for each member of an organization, or supply a pre-formatted website to a large number of affiliates, offices, agents, or franchisees,  you could use WPMU.  It is currently used in this way very successfully and on a massive scale at WordPress.com.  By giving away free blogs, WordPress.com has aggregated a massive number of users and market adaptation worldwide, and has become a dominant force in the marketplace.   This is the home of  the original WordPress MU.
Most  people now, that are looking for multi-user blogging,  will probably also want some community features (think site wide stuff like forums, profiles, etc).  If you want to build a community of any type or need to have any functionality across a website like a shopping cart, do not use MU.  Instead, you should use Drupal or something else.  WPMU is not as well supported, not as well adopted, and not as user friendly or easy to install as regular WordPress.  A very successful commercial example of a business website and profitable model built on WPMU at a very low cost is at http://cityscoop.us.   Because it can be done with the same database,  this example will soon be upgraded using the new hybrid from BBPress and WordPress integration called Buddypress.

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