In your wp-config.php file, there's a line that says Subdomains and it's set to 'false' right now. Change it to true and your site will flip over.
New sites, but not existing sites.
You'll have to fix the addresses on all the old sites to subdomains.
you'll have to update any links.
and yes, you will have to update the htaccess file as well.
tho we do state here in the forums it can be done, and provide instructions, this was mostly for the benefit of users who had picked the wrong option on install, and did not have live sub-sites to worry about.
Changing over live existing sites on the network is not such an easy prospect. Do-able, yes. easy? Not so much.