All of your questions are answered in the documentation.
Separate files are not needed for multiple sites, it supports multiple sites in a single installation which means one set of installation files.
Users are separate per site unless you enable RelatedSiteMode in which case users and roles are shared across sites.
See How To Get Multiple Sites Working on Your Development Machine for host names.
No matter whether you use host names or folders the first site should be a root level site http://localhost/somefolder is not a root level site, http://localhost is the root level site. If you already have other stuff running under localhost the above link should help you setup another site, you don't have to use localhost for everything.
See also:
Hope that helps,
Joe