With this new simple trick, you can install WordPress sites in a directory or folder instead of the sub-domain installation that comes for old websites by default. You can also learn how to alternatively install in a sub-domain instead of a directory.

Let me explain further. If you just activated a WordPress multi-site feature that let’s you run multiple websites from one WordPress dashboard, WordPress will let you install new sites either in a new sub-domain or a directory (/yourwebsite) only if your WordPress installation is less than a month old.

If you just activated the multi-site feature in an old website, by default, WordPress will only let you install new sites in a sub-domain. The reason for this is because old sites has loads of links that may interfere with a new site that is installed in a folder or directory.

Now some hosts will restrict your sub-domain site creation. You may have other reasons why you want your installation to be I a directory. I shall show you the little tweak you’ll do that will enable you.

Note that this change is a one way thing. You don’t change it today and decide to revert it after you must have installed at least one site.
How to install new WordPress multi-site in directory instead of subdomain for old and new sites

Go to your /wp-config.php file in the root of your WordPress installation. Save the original in another name say wp-config1.php.

Now edit the main wp-config. Use CTRL + F to search for the following line:

define(‘SUBDOMAIN_INSTALL’, true);

Set the 'true' there to 'false' and save your file. So it’s now like this:
define(‘SUBDOMAIN_INSTALL’, false);

Once you are done with this, go back to your Network admin dashboard and click on 'Add New Site'.

This tutorial works only in installations that has the Multisite feature installed.

Source: http://www.mymobnet.com/how-to-install-new-wordpress-multi-site-in-directory-instead-of-subdomain-for-old-and-new-sites/