Nginx Auto Domain Redirection & 404 Error

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http://serverfault.com – I'm trying to setup Nginx config to auto redirect any domain/subdomain pointed(CNAME) to my static subdomain(site.domain.com) to a respective directory inside /var/www. The directory will be named after the pointed domain/subdomain. I don't want to use VirtualHost or alter/restart Nginx everytime someone add new domain. I stumble upon this answer but I still don't quite understand. What should I set as root directory? current config : server { server_name site.domain.com; listen 80 default_server; root /var/www/; index index.html index.htm; } (HowTos)