Is this how wix and wordpress offer "free" domains like (jibril.wix.com)?

It's very possible (and common) to serve multiple sites from a single server via what Apache calls 'virtual hosts'. Basically, the web server software (like Apache or Nginx) chooses the correct site to serve via the hostname being requested.

• Apache's documentation
• Nginx's documentation

A simple example using Nginx's server blocks could look something like this:

server {
  listen 80;
  server_name site1.com www.site1.com;
  root /path/to/site1;
}

server {
  listen 80;
  server_name site2.com www.site2.com;
  root /path/to/site2;
}

Nginx would choose the appropriate site to serve based on the hostname of the request.

So, is that how Wix/Wordpress/whoever does it? Maybe, but it's probably more likely they have a more complicated system because of the scale they operate at. This is definitely one of the simplest ways to go about it, and the most appropriate for small scale stuff, or situations where you aren't frequently adding or removing virtual hosts.