OK, when I set MU up, I didn't spot that there was an option for subdomains and subdirectories, so it has defaulted to subdirectories.
My DNS doesn't support wildcards, which would mean setting every subdomain up manually.
1) If I do this, do I just need to point the subdomain at the same place on the server as the main install? It looks like MU should handle this somehow, but I'm not sure how without the wildcards in place.
2) If I wanted to change the install to subdirectories, where is the option in the PHP and what does it need changing to? I have only 1 blog on here at the moment, so I don't need to worry about content.
3) If I do change, what does this mean for plugins? I've read somewhere on these forums that plugins don't work on subdirectory installs, but I'm not sure why.