Depends on what you mean by "multi tenancy". It certainly supports different organisations using it and segregating their data, but if you mean "having many totally separated services for different sets of people", then no, you need to install many separate services.
You can set that up easily with permissions. Make sure the permission scheme for each project only grants access to the unit who should use it.
With careful admin (and getting rid of Atlassian's default "anyone with a login gets access to everything"), you can completely isolate projects into silos.
The things you can't do are:
Jira and System admins have rights over the whole system, as that's their job. You can't limit them to a set of projects. (Project admins can do "administer their projects, with no access to other people's stuff" though)
Totally isolate users. You can turn off the lookup and user directory, but it is still possible for users to see each other. Imagine you have two users from different business units - Alice Brough and Anna Brough, with usernames of abrough and abrough1 respectively. As Bob, I log in and try to get hold of Anna, but I take a guess that her login is abrough (dropping the 1), I will find and see Alice instead.
As Jira admins cannot be limited to a set of projects and Project admins cannot create issue types, modify workflows, we cannot achieve the requirement of having someone isolated in a project and be able to create issue types and edit their workflows. Please correct me if I am wrong.
Nearly. Look at the latest 7.12 Jira release. Project admins have more power over the admin of a project than they used to - they can change workflows and some field options. Issue types, no.
But as issue types are structural and essential to defining shared processes in a sane way, you almost certainly don't want project admins messing with them. Possibly being able to select them from a list, but creating new ones, no.
I have multiple projects that use variations of the same base workflow. The variations depend on the requirements of the project or issue type. The variations mostly come in the form of new statuses ...
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