I was wondering after installing multisite what is the difference between xyz.domain.com and domain.com/xyz?
xyz.domain.com is a site on a standard Multisite installation which has been set up using the “subdomain” option. The site domain.com/xyz is a site on a standard Multisite installation which has been set up using the “subdirectory” option. More on this here: http://codex.wordpress.org/Create_A_Network
If you only have the option to use xyz.domain.com, that suggests you chose the subdomain option. You need to be clear about this, as the subdomain option needs a wildcard DNS record set up for these site to work in the absence of individual subdomain DNS records to match each site name.
To clarify, read the very last paragraph here: http://codex.wordpress.org/Before_You_Create_A_Network#WordPress_Settings_Requirements
You cannot choose Sub-directory Install (for a path-based network) if your existing WordPress installation has been set up for more than a month, due to issues with existing permalinks.
That said, if you reeeeealy want it, and you understand what it’ll do to any post URLs in your main site, change the wp-config.php to ‘subdomain’ of ‘false’ when you’re activating the network. It works.
