I'm having a little bit of trouble with this myself. WordPress is installed in the root of my directory. In the Settings > General pane, both my WordPress and Blog URLs are set to the domain (no /blog), and under Settings > Reading I have the Front Page set to be my latest posts.
I do not have a Blog page created, but I can't seem to create one that actually lists my posts using this tip to do so. I'm using a specialized theme from ElegantThemes (Lumin to be exact: http://www.elegantthemes.com/gallery/lumin/). But when I create a Blog page, then assign it for my posts under Settings > Reading, it displays nothing. I've cleared my browser cache and even WP Cache, but it's still just a blank page.
Is there another step to the process?