1. When all the hosted sites are similar. Like WordPress.com for example, they are all supposed to be “blogs”. They are all forced to live with the same features, not much for options.
2. They are all managed by the same company or business. Like a set of landing page websites for a marketing firm that’s generating leads.
3. For a SAAS (Software as a Service) model. For example, you are selling the ability for people to register there own Multisite and use your premium themes and plugins as there own for a “Wedding Website” where all the peices are provided for them as they register and create there own site (usually for a fee).
Limitations with WPMU:
1. PERFORMANCE: All sites must take the extra time to load the entire plugin directory. For 30+ sites, there is going to be a ton of crap in that directory, increasing load times and decreasing performance. WPMU in general eats more RAM and processing power as it has to sort through more records and files.
2. DB PERFORMANCE: You DB is gonna get hammered, on shared hosting this will slow all your sites down. Creating new records and updating records locks the records for re-indexing, so an influx of registrations or form fills on 1 site could slow down all other sites.
3. SECURITY: The more plugins you have, the more security issues you potentially open up. If 1 plugin from 1 site lets in hackers, they take over the entire set of sites you have installed. Then, secondly, you run into security issues that may be less common, but can happen when a person registers on 1 site and is able to cross over to another site with admin based security holes. If the core directory gets hacked, all websites hosted together will contain the hacked files, likely phising sites, making a hackers job 30x more powerful and easy (if you had 30 sites).
4. CLIENT LIMITATIONS: Clients cannot have FTP access over there sites, except to there sites “blog” directory for uploads. How do you plan on providing client website backups? You would have to do something fancy and figure out which plugins and themes they are using and not back up the others. Along with backups, how would they migrate away from you? Maybe your plan is to “force them to stay”, but thats not ethical business. Clients cannot have admin access to install there own plugins / themes (only super admins can do that).
5. INCOMPATIBILITY: Most plugins on the WP.ORG repo are not built and tested for WPMU. So tons of plugins will be broken when installed on multisite.
6. CONFIGURATION: Only 1 configuration can be made, without doing some pretty complex programming. That means only 1 wp-config file, only 1 htaccess file, etc. What if 1 client needs 128mb of ram per page load while another should stick to the default? No way easy way of separating the configs.
7. SPAM: You will naturally get more spam registrations because meta data will inform bots that you have multiple sites and they will register on all of them. Comment on all of them, etc.