WordPress 3.0: Creating Multi-User Web Sites
From the blog:
For the longest time, WordPress and WordPress MU have been two separate entities. Word on the street was they were attempting to merge the two platforms, but many of us thought it was too large of an undertaking to be ready for the release of WordPress 3.0. Thankfully, we were all wrong. WP 3.0 has integrated all of the core functionality of WPMU, though for some reason it is not an available feature by default. You need to take a few extra steps to activate it.