This is probably easier to maintain (code wise) using different root folders, but configuring the http output folder within apache or nginx configuration.
Yes. Drupal itself is moving away from multisite and toward this kind of setup. Disk space is cheap now. Unless you're talking about literally thousands of sites, and you have the Drupal expertise on your team to manage that kind of setup, use separate root folders.
Create these directories. Add a settings.php file to each. Add stuff to sites.php if needed. example.com.a and example.com.b should definitely work. Not too sure about the other two because I haven't created a site in a multi-site setup that is 2 subdirs deep, but it is easy enough to try.
I am looking for to have a separate site for: example.com/, example.com/a, example.com/b, example.com/a/123, example.com/a/234?
If not drupal, is there an alternative (wordpress plugin?) to achieve the same?