How do you have several blogs on a single WP site?

Hi, I am a novice when it comes to wordpress and I have no clue on how to fix this problem that I have. I want to have multiple blogs on a single site managed by the member who created it. Or me being able to add blogs to the site manually somehow and then give them a username and password or such.

Ok let me clarify what I want. I want people to be able to register on my site and then be able to create a blog (Pretty much only be able to make new posts and edit comments on their blog) This blog should then be located on my site and function like a page.
So if you for example hover over blogs in the menu and then click on a blog that appears then it would open on your site just like if you had an About page or FAQ page or something like that.

Is there any plugin that I missed or any simple way of doing this because I have no idea on how to accomplish this. Any help with this matter will be greatly appreciated ??