How or why does the multiverse create new universes? Again, there are a number of different proposals for how this might happen, from eternal inflation which creates a sort of patchwork universe with bubble universes layered into the fabric of a singular flat multiverse (think of a quilt with the whole blanket being the multiverse and the patches being universes separated from each other by the knitting, but infinite in size) to a newer proposal by physicists Sean Carroll and Jennifer Chen called "Baby Universes," first discussed in 2004 here and elaborated upon by Carroll in his book From Eternity to Here.
In his book, Carroll explores the mysteries of the arrow of time. Why do we perceive time to be "flowing" in a single direction? The argument basically boils down to the second law of thermodynamics and entropy. The direction of time is regulated by the tendency of entropy (the amount of disorder in a system, or the amount of information needed to describe the state of a system, if you're into information theory) to increase. The fundamental laws of physics are ultimately reversible, so why we should perceive that eggs break, but don't spontaneously come back together really has to do with the likelihood of events occurring. If we took a box of evenly distributed gas and watched it for a while from within the box with no other frame of reference, we'd be hard pressed to say time exists at all. Nothing happens. We exist and watch a homogenous stew where nothing "ever" (a tricky word to use depending on how long you plan on watching) happens. If, however we were observers in a box of gas in which all the gas was nicely organized in one corner by a force field and then watched what happened when the force field turned off, we definitely would see something happen. Over time, the gas would spread itself out to equilibrium so that the density of gas was roughly the same everywhere in the box. While that was happening, we'd be able to "see" something - a process unfolding before our eyes that could tell us what was "before" (gas was organized in a corner) and what came "after" (gas was evenly distributed). It's the viewing of these processes that defines time for us observers in the box we call the universe.
Knowing this fact about our universe tells us a lot about the place we live. We know, if that's the case, that the entropy of the universe must have been relatively lower in the past for us to perceive that the entropy of the universe is increasing (which it always is according to the second law of thermodynamics) all the time. Why should that have been the case? If entropy always increases, why was the past a time of relatively low entropy? Did something make it that way? Some law of nature that we're unaware of? Also, if entropy always increases, can it increases without limit? And what happens, if we take our box of gas analogy and apply it to the universe, when we reach a point where all the matter in our universe is evenly distributed and relatively homogenous? Does nothing more happen once the universe plays out this cosmic evolution?
The problem with cyclic cosmologies is that contractions of the universe tend to involve a reversal of this well-established principal. If everything was neat in the beginning (condensed to a single point, a singularity) and has become more spread out and diffuse or messy since then (a la cosmic inflation), and this is a natural thing for the universe to do, how does the universe then decide to reverse this? Traditional thinking was that gravity would catch hold of inflation in the future and cause a re-compression of the universe, but think for a moment what that would mean for the arrow of time. Once gravity starts pulling things back in and reversing the expansion of the universe according to the clockwork laws of motion discovered by Isaac Newton, it would appear to us that the universe was operating in reverse! Light would leave telescopes and be absorbed by stars, which break down heavier elements into lighter ones only to dissipate into clouds of gas while you undigest and throw up your scrambled eggs before they uncook themselves and reassemble back into their shells and roll back into the hens from whence they came. The disorder of the universe would decrease if this were so, violating the cherished second law of thermodynamics while completely honoring the reversible laws of Newtonian mechanics. The observed acceleration of receding galaxies has kind of put a damper on people who still advocate a Big Crunch scenario.

"...from the point of view of an outside observer in the parent universe, the entire process is almost unnoticeable. What it looks like is a fluctuation of thermal particles that come together to form a tiny region of very high density - in fact, a black hole. But it's a microscopic black hole, with a tiny entropy , which then evaporates via Hawking radiation as quickly as it formed. The birth of a baby universe is much less traumatic than the birth of a baby human.
Indeed, if this story is true, a baby universe could be born right in the room where you're reading this book, and you would never notice." (Carroll, 358)Which of course, begs the question: has it happened before? Carroll, again,
"It's not very likely; in all the spacetime of the universe we can currently observe, chances are it never happened."(Carroll, 359)But apparently, it could.
Carroll, Sean. From Eternity to Here: The Quest for the Ultimate Theory of Time. London: Plume Books, 2010.