Under the standard 3rd edition D&D rules for multiclassing, characters are allowed to multiclass almost any combination of classes they desire. However, the standard rules impose some fairly stiff penalties for multiclassing in the "wrong" way.
The Standard Rule
However the standard rules assert that developing and maintaining skills in more than one class is a demanding process. Depending on the character's class levels and race, the character might or might not suffer an experience point penalty.
If a character's multiclass levels are nearly the same level (all within one class level of each other), then he or she can balance the needs of the multiple classes without penalty. For example, a 4th-level wizard/3rd-level rogue takes no penalty.
If any two of a multiclass character's classes are two or more levels apart, the strain of developing and maintaining different skills at different levels takes a toll. A multiclass character takes a -20% experience point penalty for each class that is not within one level of their highest-level class. These penalties apply from the moment the character adds a class or raises a class's levels too high. For example, a 4th-level wizard/3rd-level rogue has no penalty, but if that character raises their wizard level to 5th, then he takes a -20% penalty from that point on until their levels are nearly even again.
A favored class would not count against a character for the purpose of the -20% experience point penalty. In such cases, one would calculate the experience point penalty as if that character did not have that class. For instance, an 11th-level dwarvish character could be a 9th-level rogue/2nd-level fighter and take no experience point penalty, because fighter is the favored class of dwarves. If the character became 12rd-level and added a level of barbarian, then he would take a -20% experience point penalty on future experience points that he earns because his barbarian level is so much lower than his rogue level. If he thereafter rose to 13th-level and added a fourth class such as cleric, he would suffer a -40% experience point penalty from then on. And so on.
In addition, for reasons entirely unrelated to game balance, certain character classes such as the monk and the paladin were prohibited from multiclassing at all, on penalty of losing all of their class abilities if they did so.
The House Rule
I don't like the standard multiclassing rules, mostly because they punish certain forms of character development for no real reason other than to make humans (and to a lesser extent half-elves) balanced. Instead, the Three Worlds campaign (and pretty much every other campaign I plan on running), will use a house rule concerning multiclassing and favored classes.
The house rule for multiclassing is simple: There are no penalties for multiclassing. Players can have their characters mix and match classes however they like without having to worry about the relative levels between their classes. There are also no class-based restrictions on multiclassing, so paladins and monks may freely multiclass.
Without any penalties for multiclassing, the standard "favored class" rule has no real meaning. Instead, a character gains a bonus skill point for every level of their race's favored class that they take. The first level a character takes of their race's favored class grants them four extra skill points (this bonus only applies once in a character's lifetime, so a character who takes levels in both their race's favored class and their race's exclusive class only gets the four skill point bonus once, for the first of the two classes they took). For every five levels that a character takes of their favored class, they also gain a bonus racial feat.
Every race has at least two favored classes: One that is a player character class, and one that is a non-player character class. Every race also has at least one exclusive class. An exclusive class is treated as a favored class for all purposes, and a character's levels in their favored classes and exclusive classes stack for the purpose of calculating when they are eligible for bonus feats. For example, a 5th-level dwarvish character who was a 2nd-level fighter/3rd-level artificer would be eligible for a bonus racial feat because he has five levels of classes that are considered to be "favored" for him.
A character may treat all race-restricted prestige classes of their race as a favored class. For example, as the stonelord prestige class is restricted to dwarves, a dwarf treats it as a favored class when determining eligibility for bonus skill points and bonus feats. A Note About Humans
The dominant trait of humans in the Three Worlds is their versatility. Therefore, they treat all classes as favored classes. This includes all player character classes, non-player character classes, and prestige classes. Consequently, humans gain an extra skill point at every character level and a bonus racial feat every five levels. These bonus skill points and feats are in addition to the normal bonus skill point at every level and bonus feat at 1th level that a human character receives.