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One domain, one codebase, unlimited sub-domains and databases

You can set up *.mysite.com to point to your app, by setting your CNAME records accordingly. See App Engine's Using a Custom Domain documentation for details on how to set this up properly.

Then, within your servlet/request handler, filter the domain in the request URI to find out what the subdomain is. After that, many of the services (datastore, memcache, etc.) have "multitenancy" support, where you can specify what namespace you're doing operations in. You can set that to the subdomain.

I don't know what language you're using, but here are the docs for multitenancy:

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