WordPress MU

Hello. I am new to Word Press and need some help using the multiple blog feature. I want to have multiple blogs, for simplicity we'll say I want two blogs:

testsite.dev/news
testsite.dev/blog

I have three questions that I would like some help with:

First Question:
I have copied the default theme and am customizing that, but how do I handle these extra blogs? Do I create a folder in the main theme folder for each of them with the same name as the blog and then each blog gets it's own set of theme files in its own folder?

Second Question:
What is the default blog "/" used for? Do I need to keep this?

Third Question:
How can I list entries from all of my blogs on the site home page?

First Answer:
Themes are independent of the blogs. When you initially install wpmu, the default blog "/" will automatically use the "home" theme. Any other blogs you create (testsite.dev/someblog) will use the "default" theme.

If you want more themes to choose from, simply put them in the /wp-content/themes/ directory. It's best to keep each separate theme as a separate folder in there. Don't nest theme directories (it may work, but it's not a good idea).

To make the new themes available to blogs to pick from, log in as the site-admin and in the Site Admin > Themes menu, you can control what themes are available for users to choose from. They will then be able to go to Appearances > Themes and choose whichever themes you have loaded for them.

Second Question:
It's for whatever you want it for. We use it to tell people what our service is for and show them some recent posts from blogs on the server.

Third Answer:
Out of the box you don't. You can add this functionality using Donncha's WordPress MU Sitewide Tags plugin. You'll need to customize your home theme to make the most of it.