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I see an advantage in having a seperate database for every blog. If you mess up your database for whatever reason (or someone else does), it will only affect one blog. Performance wise, it won't matter much if everything is on one server anyway.
If you have hundreds of blogs, having 10 in one database for a better overview certainly won't hurt, just don't put all your eggs in one basket...I follow this rule for everything: Hosts, sponsors, databases, etc.
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