How do you host a multi-player survival game in Minecraft?

I've downloaded all the required files in order to host an on-line multi-player Minecraft game on my computer, and successfully made a server. However, it seems that I can only make games in free build mode, where you have unlimited resources to build with. I prefer the survival mode where you have limited hp, there's a day/night cycle, mobs spawn, etc (the registered user version, not the classic free version).

Is it possible to host a survival multi-player game, whether on-line or local?

EDIT: Given Minecraft is undergoing huge changes please update your answers as appropriate.

2 Answers

You need to download the multiplayer survival server. It can be found at at the bottom of the page.

You can now host a local multiplayer server without any additional software.

Start or continue your map in Single Player, press esc and select

"Open to Lan".

Other players can then join your game from the Multiplayer menu. The LAN game should be automatically detected.