Well, for anyone to use www.xxx.com, i.e., a second-level domain, then that domain needs to be registered with internic, whether you choose to go through a bulk registrar, network solutions, etc. And if you're hosting and managing the DNS for thesesites, then you can put them anywhere on your webserver that you want, either pointing them to a sub-directory of your own domain xxx.yourdomain.com or www.yourdomain.com/xxx, or by giving them their own directory on your webserver, like www.xxx.com.
But if what your looking for, is a less-expensive solution for the customer (so you don't have to deal with domain registration fees and managing all of your customers second-level domain DNS), and so that you have more control of the customer'ssite, then the virtual domain option that you have heard of is probably as follows:
You register your own domain www.yourdomain.com once and host it on your server. Then you sell off subdirectories of that www.yourdomain.com/xxx, but by adding the appropriate entries in the DNS, and/or webserver, you can map xxx.yourdomain.com and/or www.xxx.yourdomain.com to point to that customer's subdirectory of your site www.yourdomain.com/xxx. Some may think that xxx.yourdomain.com looks a little more professional than www.yourdomain.com/xxx I guess.
The specifics of how you do that mapping depend on what you use for DNS solution (i.e., bind? Microsoft DNS?, etc.), and what you use for webserver solution (linux/apache, MS/IIS, etc.), but is is certainly possible and feasible on any platform.
I hope I understood your request well enough and have provided a helpful answer. Let me know if I can clarify anything.
--Charlie
