You cannot use 1 ExpressionEngine installation to drive a multitude of websites for different customers. That would be a violation of the license, because you'd essentially be paying once to derive revenue from any number of clients, even if you're paying for Multiple Site Manager seats as they come on board.
Multiple Site Manager's use is to develop satellite sites for a single customer, where you're not only relying on maintaining 1 core install, you're also pulling content from the core site into those other sites. If you had a corporate website and set up sites for your branch offices, they could pull news articles from the corporate website while having their own home pages, contact us pages, etc. You can run those satellite sites on a subdomain, or their own domain. Each vhost on your server gets a copy of the index.php/controller file, and pulls the system in through the core system folder.
I don't know the exact wording of the license. I don't know if there's a requirement that the multiple sites sharing anything other than an install. But I think it's safe to say that if they're separate customers, they should have their own license, no matter how you install/configure your server.