How make blog hosting using WP?

I have seen other blog hosting using wordpress to make blog hosting auto.. users could sign up for a blog and even set their subdomain like blog.xx.com/username which is very insteresting.. Everything is auto, meaning I don’t need to manually create a folder using the cpanel or ftp. I’m searching around the forums and extend but didn’t find a tutorial for that. I even googled it. Could somebody provide a link to that tutorial?

Thanks