Allowing people to setup their own blogs would be a nice benefit of this kind of functionality. The business case that I had in mind was that you could run lots of websites from a single install and it would just make management of those websites easier.
A lot of people use WordPress as a generic CMS, and I've seen a lot of web design firms (my own company included) use WordPress MU to manage dozens of websites this way. In fact, our company has its own ASP.NET CMS which has this kind of functionality
- and it's really cool to be able to just point an A record and have a website up and running in five minutes. My clients can login and edit their own websites too. This is the sort of thing that I'd like to see in Oxite - WordPress MU is a bit of a hack really,
if you look at how it manages the database. Oxite already has the right kind of database schema for this functionality.
I know you guys are really busy with the upcoming release, so I'm going to have a look at the code and see what needs to be done. I'll post my ideas here.
Keep up the good work Erik. :)