Drupal's multi-site hosting capability is built in with any
installation. This is great news for users who run numerous web sites
from a single hosting account. A single Drupal installation can
be used to run multiple domains, which makes it much easier to manage
and maintain the code base. Even if you are dealing with only one
domain, the multi-site capability may be valuable by providing the
ability to run a separate domain or sub-domain for a development
version.

This page describes the set-up of the /sites directory for multi-sites.