Reading through the documentation you have the ability to setup a WP Network in two ways, Sub-Domains and Sub-Directories. The only explanation they give you is
Sub-directory sites
It works with the use of the mod_rewrite feature on the server having the ability to read the .htaccess file, which will create the link structure.
If you are using pretty permalinks in your blog already, then subdirectory sites will work as well.
Sub-domain sites
It works using wildcard subdomains. You must have this enabled in Apache, and you must also add a wildcard subdomain to your DNS records. (See Step 2 how to set up.)
Some hosts have already set up the wildcard on the server side, which means all you need to add is the DNS record.
Some shared webhosts may not support this, so you may need to check your webhost before enabling this feature.
I’m looking to find if there is a performance, maintenance or other benefit to use one over the other.
I began using Multisite just a few months ago, and am really loving it. You’re going to want to use the sub-domain structure if you have a host that supports it. I use a Media Temple Grid Server plan. It will allow you to create a subdomain and then mask it with a symbolic link. i.e. rtgibbons.mynetwork.com would be mapped as rtgibbons.com or whatever URL you want presented.
Upon a Google search, I found that as long as you plan to use Domain Mapping, there will be no advantage to either method.
http://wordpress.org/support/topic/multisite-subdomain-vs-sub-directory-setup?replies=4
I’d suggest subscribing to the WordPress.org Multisite Forum. There is very good info over there and Andrea_r is very sharp.
Not that I really have the credentials to answer this but I did find this awhile back and thought I’d share. It’s a pretty decent walkthrough of what to do for setting up the multisite feature, permissions, and things of that nature. Like I said, it doesn’t really answer the question here but it does work in tandem with what we’re looking to do.
http://digwp.com/2011/02/hosting-clients-wordpress-network/
Thoughts?
The only difference is SEO. And also subdomain require wildcard subdomains st up server side. Subfolders stuff a /blog/ off the main site only for permalink collisions.
Otherwise, within WP itself is irrelevant.
A standard (not-multisite) WP install
on a web site is usually installed in one
of two ways.
As A Sub-directory
Sub-directory sites
are put in separate folders
like this mydomdotcom/folder
and is accessible as mydomdotcom/folder
As A Sub-domain
Sub-domain sites
are put in separate folders too
except that the virtual folder name
of (mydomdotcom/folder)
is an alias name,
configured by mapping the alias name
through Cpanel or other access
that presents
the information existing in
newfold.mydomdotcom
as mydomdotcom/folder
The end result is that on the site
that presents the information
the access folder is the same
/folder
but where the information physically exists
on the server is different
ie..(folder versus newfold.mydomdotcom)
Now to answer the question of why the difference
and when to use one type of install versus other?
If you use html files on your main site
(or from any folder on your site)
and you want to display and use a WordPress installation
(that exists in a /folder) within your main html files
that display on your main site then
a Sub-domain installation would work best
As reference and in comparison,
a (WPMU) multisite WP installation
would do the same thing except that
Wordpress is installed and used in main site
and because of the WPMU configuration
WP existing in folders on the site
are accessible as (and looking like)
they are part of the main site.
The bottom line is information and how you present
and want site vistors to access information.
Either through your site as one main interface
or through separate folders
(which will usually always pop out as separate Sub-folders
if they are installed as such, versus Sub-domains that allow
wrapping into another interface without popping out)
In addition when do use Sub-domain versus Sub-folder
you usually have separate stats for that
one physical location on your server.