Can somebody tell me how I am supposed to be using blogs.dir for network / MU sites?

Question

blogs.dir was the way to handle specific blog plugins and themes when it was WordPress-MU
but since version 3 came out and the WordPress-MU was integrated into WordPress Core and introduced WordPress Multisite, that’s no longer the story.

WordPress Handles the creation of the new blogs/sites in the database and mainly in the background so you won’t see too many things changing, but it also includes a new menu in the admin “Super Admin”

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which lets you handle the content for all sites in one place and they all site in one place.

so basically WordPress handle this issue of `blogs.dir’ for you.