Sharing an iTunes Library could be very convenient and is commonly asked. There is one extremely simple and effective way of sharing your library but there are also alternatives that give you certain benefits that the "Apple condoned" way does not. It also depends on whether you are trying to share multiple libraries that are on one computer, sharing libraries of multiple computers or trying to share multiple libraries from multiple computers. There are also some considerations that you must make before you choose a method. In order to make that choice, let me explain how iTunes is setup.
Since Mac OS X is a multi-user environement, every user can have their own unique experience when using the computer. This means that each user can have their own email, their own address book, their own calendar, their own MUSIC, among other personal items. To accomplish this unique environment for each user, these files are all stored within the user's Home Directory. You may notice that when you are logged into the machine, your home directory has a little "house" icon to represent your home directory. However, every user has their own home directory but their icons are simple folders. You'll notice that you can go into their home directory but will NOT have access to their "Documents" folder or their "Music" folder etc. This is a way to protect privacy of each user. Though this was new to the Mac with the introduction of OS X, this has been a standard in UNIX environments (which the Mac OS now sits upon).
The Default preferences
The default preferences for iTunes is the way iTunes is setup "out of the box." For most people, this is the perfect way to keep iTunes organized. If you go into your Music folder, you'll notice another folder in there called "iTunes". This folder, obviously, has everything to do with your iTunes music, TV shows, podcasts, etc. All of your music is stored within this folder. This is why it is not accessible to other users on the same computer. Since iTunes is capable of managing thousands and thousands of songs, there is a database that keeps track of what songs are in your library and where they reside on your hard drive. This allows iTunes to operate very quickly when going through thousands of songs. Let's take a peak inside of your music folder and see what exactly is there:
Most importantly right now- notice the "iTunes Music" folder. That is where all of your music is stored. You also have an "iTunes Library" file- that is the actual database that iTunes uses to keep track of your music. And the "iTunes Music Library.xml" file is the text file that is used to build the "iTunes Library" database.
This is a typical iTunes setup and it is very efficient for most uses. However, if you have several users on a single Mac that would like to share a single library, all you have to do is simply change some preference settings. As in all Mac apps, the preference setting can be found under the application menu. So, when you are in iTunes, go to the iTunes menu and select "Preferences." 
Once you are in the Preferences of iTunes, go to the Advanced tab. In the following picture, you'll see a typical (default) location set for the iTunes Library. 
Since this is a preference setting, these settings are only valid for this user account. Another user account can be set differently. Notice that iTunes will look within the "Users" folder, then "mikevincenti", then "Music", then "iTunes" and finally within the "iTunes Music" folder for the library. You can hit the "Change" button and change the location of your library. If you wanted to share your library with other users on this computer, I'd point iTunes to the "Shared" folder instead. This folder is specifically set up to allow access from any account. It is there to share data between accounts. Not only can you use this folder to share an iTunes library, but you can also leave documents or pictures there to share with others on the compuer as well. Making use of the "Shared" folder is ideal for sharing information.
Again, the Shared folder can be found at "Macintosh HD/Users/Shared". Be sure to set every user's iTunes preferences to this location so that no one is left out. Now, whatever music one user has access to, so does every other user. This is ideal for a family environment where sharing music is no big deal. Obviously, you wouldn't want to share email so sharing a single user account would not work.
Sharing an iTunes Library With Multiple Computers
This is really no different except that you would want to have a NAS (Network Attached Storage) device to hold your library. Think of a NAS as a hard drive that you do not plug into a computer directly but rather a router or switch so that the hard drive is available to everyone on the network- not just a single computer. Setting up a NAS is beyond the scope of this article but once that is set up, simply point iTunes to the NAS and now everyone on your network will have access to that music.
Sharing Other's Libraries
There is a pretty neat feature built into iTunes that allows you to view and listen to other people's music libraries. This may be exactly what you're looking for so without changing any preferences, this may suffice...
While in iTunes, look in the left column. If you are on a network and other people who are using iTunes has iTunes open, you may see their library pop up as available. You'll be able to listen to anything that they have they have granted you access to! You can designate certain playlists to be available to the network or you can simply allow your complete library to be shared. You won't be able to burn or copy their music but you can listen to it. And you can share your music too. Just go to iTunes Preferences and turn sharing on. You might also want to require a password to restrict access to only those that you give the password to. Keep in mind that this only works on the local network and NOT over the internet. You must be on the same subnet. This is a really cool feature to have while at work among a group of people who like to listen and share music. Obviously, this could also be used at home. However, you'll find out that this feature is only as good as the music that others share! ;)