What should do to setup a sub-domain for the users when they sign-up into my site.
What are the infrastructure required? I am using Linux servers.
Apache allows you to specify any number of 'sites' based on subdomains on a single server. Creating a new 'site definition' file with the appropriate subdomain information in it, along with proper DNS wildcards, will do what you want.
In other words, the process is like this:
IMPORTANT This is based on a Debian-style Apache configuration, where the config files are included in a directory, and the main configuration reads all the config files in that directory. This will simplify things a great deal, because adding/removing subdomains will mean adding/removing files, rather than editing a single file, and so the process will be much easier to automate.