I want to duplicate a drupal site to make subsites where each site will utilise the same basic modules and core but just have slight variations in theme and need own database on a dedicated server. To save memory I want to avoid having subsites all containing same modules, I have only briefly read the documentation for drupal multisites where they share the one core but is it possible to share sites/all/modules and libraries as well?
In a multisite setup anything in sites/all is shared. This means sites/all/modules, sites/all/themes, sites/all/libraries are all shared.
In addition to that, if you have things that are specific to a subsite, for example, a sub-theme, or a module or library, you can add them in sites/subsite_name/modules, sites/subsite_name/themes, sites/subsite_name/libraries.