I'm an old D&D fan. like 2nd edition old. I'v been trying this game and noticed it's a 3rd edition D&D... . How does multiclass work? In 2nd edition you could pick a half elf and right of the bat make it a F/M/C if you wanted. Here I can only pick 1 class.

Each time you level up you can pick a class for the level you just gained

It follows the 3rd edition rules for multi-class. When you attain a new level you then have the option to pick different character class if you choose.

I have not really played multi-class characters that much.

3rd edition has some rules regarding maintaining balance between the levels and race specific aligned favoured classes which reduce experience gain or not. I am not sure how much of that is applied in IWD2.

It's implemented in IWD 2 as explained in the manual. Class levels must be close to each other except for one favored class.

Make sure to keep your primary spellcasters pure class. A fighter5/cleric5/mage5 feels pretty useless compared to a pure class level 15 caster. Being limited to level 1-3 spells when you're supposed to be able to cast level 8 spells can get you into trouble.