The multiple users feature works like this:
• It's long been true of the Mac OS that you could have more than one system folder on a disk. Thus you could have different system folders with different versions, or different preferences, on the same disk. The active system folder was "blessed", i.e. it was specially designated by the system as the System Folder, regardless of its name, etc. You could see which folder was so blessed because the blessed system folder would acquire the special icons of System Folder, Apple Menu Items, etc.
Applications ask the Finder for the active Preferences folder, etc, and thus receive a location that may or may not have had the path "System Folder

references".
• What OS 9 does is make a special "Users" folder at the root level of the startup disk. In this folder it keeps one folder for each user of the computer: "Joe", "Bob", etc.
• In this folder, it keeps copies of Apple Menu Items, Preferences, and so on. When you log in, your Preferences folder, Apple menu items, and so on are "blessed": thus, applications look in your special folder, rather than the System Folder of the disk.
Some weird variation on File Sharing access controls keeps you, or any program you run, from looking at other users' folders.
This is my question on this topic:
Is it possible to link the Users folder to another disk?
I like to keep documents and applications on a separate disk from the system software, to make crashes less dangerous and recovery easier. But, OS 9 keeps the magic "Documents" folder inside of the startup disk; and trying to install an alias to a folder on another disk loses the access control abilities...
Any ideas whether you can make the Users folder or the Documents folder an alias to a folder on another disk?