5 answers
Multi-tenant systems place the data from multiple companies (org in Salesforce) on the same server, generally separating them from each other via a simple partition that prevents the data from migrating from one company to another. There are various benefits of multi-tenancy including cost savings, no upgrades headache for the client (and faster and smoother upgrade for vendor), flexibility, scalability, high performance, low operational costs etc. Salesforce.com is based on multi-tenant architecture and it works pretty well.
For more information about Multi-tenancy you can refer to:
http://en.wikipedia.org/wiki/Multitenancy
For more information about Salesforce Multi-tenant architecture you may refer to:
http://www.developerforce.com/media/ForcedotcomBookLibrary/Force.com_Multitenancy_WP_101508.pdf
