Since version 3.0 Wordpress code will support a single blog as earlier versions did, and now newly, multiple blogs on a single installation. The downside is that multiple blogs require considerably more administration. So unless you know positively that you want multiple blogs, you are advised to choose the single blog option.With the Multiple option you can choose either to have the blogs
If you choose the single blog option you can change it to the multiple blog option later (how to do this is in the documentation in wp-docs see http://paul-gorman.co.uk/wp-docs/multiple-blogs.html. It will open in a new window and maybe you want to bookmark it now). But once you have implemented the multiple blog option you cannot revert to the single blog option, short of destroying any secondary blogs.