wordPress multisite is the feature by which you can map the multiple subdomain/subfolder to the same website. and give a diffenret  look of the website as if it is a different website.  You can achieve this difference by three means.

(1) Changing the plugins and theme for that subdomain/subfolder.

(2) Changing the behavior of the Website based on the subdomain/subfolder.  for example you  can implement IF SUBDOMAIN IS EQUAL TO XYZ DO SOMETHING ENDIF.

(3) The database tables are created per sub domain, this way you can segregate the data, according to sub domain.

Here I just want to share my learning of  setting up WordPress multisite on my laptop localhost server.

When you want to setup a WordPress multisite, or WordPress Network, the authentic guideline is available at

http://codex.wordpress.org/Create_A_Network,

The steps are very simple and works as explained above, but couple of things you need to keep in mind from localhost perspective, and otherwise you may get 403 Forbidden error.

LESSION 1.  IF YOU ARE BIGINNER DONT PUT wildcard (*) in host file , better you try jsut one subdomain.  for example

HOST FILE          =>    127.0.0.1       testsub.localhost

LESSION 2  DONT PUT ADDITIONAL rule for testsub.localhost in HTTPD.CONF   instead just add  ServerAlias to parent domain i.e localhost.

HTTPD.CONF       =>

<VirtualHost *:80>
DocumentRoot “C:/Program Files/Apache Software Foundation/Apache2.2/htdocs/wordpress5”
ServerName wp5.localhost
ServerAlias *.WP5.localhost
ErrorLog “logs/wp5.error.log”
CustomLog “logs/wp5.access.log” common
</VirtualHost>

LESSION 3 . AFTER  ENABELING  WP_ALLOW_MULTISITE , and modifing the .htaacess, and wp-config.php when you refresh the admin page. you wont see Tools ->Network Setup again. BUT DONT WORRY look out for it at the top left corner  where you can “Mysites” menu item. explore it.

LESSION 4 . DONT DOUBT HTACCESS FILE MUCH  IF YOU ARE GETTING 403, FORBIDDEN ERROR then BETTER TO TRY OUT ON LAW SCALE, AS I SAID  INSURE ABOVE SAID POINTS.

if you want wild card in host file then  better go for  proxy DNs as per http://stackoverflow.com/questions/138162/wildcards-in-a-hosts-file

In 2010, WordPress released version 3.0 of it popular content management platform. Among the many improvements included in the release, the WordPress community combined WordPress MU into the main WordPress configuration. Since the change, WordPress has made it easier to create multiple WordPress sites on one server. Whereas earlier, each WordPress blog on a server needed to have its own installation, now a new WordPress site can be installed once, and other blogs can be set up from within the WordPress dashboard.
Despite how powerful and cool (in a web geek kinda way) WordPress Multisite is, it's not appropriate for all projects and sites. Here are some examples of when not to use it.Maybe but probably not. If we’re talking about just a few websites, each with completely different purposes, functions, and goals, it might be best to run them on separate installations of a single WordPress. There is nothing wrong with this, as long as you keep them all up to date.In regular WordPress, the “administrator” role has the highest permissions on the site. WordPress Multisite still has an administrator role for each site, but there is also the “super administrator.” The super administrator has access to every site on the network, with the ability to manage everything on every site.