How do I set up "sub-sites" for different geographical locations?

I am starting a new site of event listings, and I want to be able to have both regular and "recommended" listings for each location. I made categories for each location, and then I put another category called "recommended," but I want each location to be viewable separately (ie: you would only view the recommended events in your location, not site-wide.). What's the best way to set this up?

Secondly, I want to have both news and events on each location's home page. How should I set up each home page so it would only display the news and all events for that location?

Drupal looks pretty amazing so far!

Thanks!
-liz