You should scale this the simple way:
- Start of on a single server with local MySQL service.
- Later move your database service to a dedicated instance.
Cloud computing can be nice for this kind of thing – start off slow and have computing resources always available. You could also look into a provider who manages servers for you and try to build a relationship with them so they can help you along the way.
Either way there are plenty of things to do (and learn):
- How to scale PHP (e.g. you probably use Apache first, then later something like nginx and php-fpm).
- How to scale MySQL – the defaults usually don't utilize the available resources very well, etc.. Down the road you could set up master-master MySQL setups and read-only slaves to scale this further.
- Implementing a cache – e.g. WP Supercache or something more aggressive like Varnish which could cache and serve requests for blogs without any PHP or database interaction required. This can work really well when updates are not as frequent. Of course measures have to be implemented to invalidate the cache when an update (new blog post, edited blog post) happened.
All of this will work for a while, but there is no ultimate fix. Or no "one fits all solution".
I'm not sure how much logic is required here and doing it automatically doesn't work really well.
The problem you will most likely have is, that some blogs get more busy then others. Something to think about is how you can easily move a blog from one server to another, e.g. to a new server (dedicated to it or one that is more idle).
Same applies for your database service, you can scale it out with replication only so far. One of the things you might need is to setup a dedicated instance for more busy clients, etc.. I'm not sure how WP MU works on the backend to answer how much of this can be automated or what exactly is required to get this done.
Bottom line: I wouldn't overdo it and I'd play it by the ear. I'm not sure if you can predict your success, but I wouldn't invest money in infrastructure unless it is really required.
Last but not least, you sound like a beginner from what I gather. So don't take me wrong, but I suggest you either take a lot of time and take some courses for system administration and become a PHP developer (and database administrator) along the way, or you figure out a way to hire people who can solve these problems for you.