Wordpress 2.7 has treaded comments enabled. You do not need to install any plugins, but your theme should support this. I use Revolution Theme Church which is compatible with treaded comments. Threaded comments are like you can reply to a particular comment. Every comment will have a reply link, just click on the reply link which will display a comment posting box. The comment posted as reply will come below the the comment to which you have replied. This makes it easy to understand if a comment is a response to a particular comment. If you have your theme compatible with Treaded comments, then you need to enable it by going to your Wordpress Admin panel –>Settings-Discussions and enable threaded comments and you can decide the depth level
If your theme is compatible for threaded comment and if you find its not working, then check if you have enabled in the settings as it not enabled by default. It happened to me.
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Thanks for the post, this was just what I was looking for. I’ve been running WP 2.7 since release and just now wanted the threaded comments. But couldn’t findout where to enable.