MySQL Multiple Database Setup

I've searched for an answer to this and all I can seem to find are questions asking whether it is better to use multiple databases or multiple tables in a single database. This isn't my question though.

QUESTION 1.
I want to set up a new database alongside my current DB and don't know how. I want to give a user full admin access to DB2 without seeing DB1. This way I can host a friend's site and they can create and delete as many tables as they want without disturbing my own DB. I could also use it for demo sites that aren't secure and shouldn't exist inside my primary DB.

I figure I could do this pretty easily with a virtual machine and run a separate instance of MySQL but my resources are limited so that isn't really an option.

I'd like to set this up in one of 2 ways. I would prefer to have "server.example.com" host both DBs and open the proper DB based on user login. If not I could do it routing to server1.example.com and server2.example.com.

QUESTION 2.
If this isn't possible I'd like to know how to properly set up restricted access to a single DB in sequel pro. I have been messing around with it and so far prefer it to PHPMyAdmin. For some reason if I set up a new user with no permissions they have full access to my 'information_schema' and 'test' tables but can't create new tables. I don't want other users to access these tables though and I want them to be able to set up their own tables. I'd like to set it up so a new user can create a limited number of tables and only see and edit those tables. I can't seem to find information on this either.

Even if my first question is possible I'd like to know the answer to question 2. I've been searching for a long time and can't find reliable information anywhere. Maybe my brain is just tired...

You can set up multiple instances of mysql but for your situation you are better off creating different databases within the same instance.

You can create databases and then add users that only have access to manipulate the database they are given and nothing else.

Essentially the heirarchy is as follows:

Mysql (root or any other super user can see everything)
- Your DB
  - Your Users
    - Your tables/functions/Procedures/etc
- Their DB
  - Their Users
    - Their tables/functions/procedures/etc.

You basically separate the access for each, and in PHPMyAdmin it is very easy. The steps are:

1. Add Database )
2. Add User, restricting them to that database allowing only priveleges you want to give to that user and only to that database. (Guide here)