There was a discussion of friends of friends or network, as it will be called on Dreamwidth, on the dw-discuss list here and mark's response is:

Sorry, the 'network' page (friendsfriends) is horribly broken. I haven't updated it since we did the access/subscribe (WTF) split.

It's not on the slate for open beta, but we'll get to it soon after. Sometime before the full site launch!

So the feature will not be available until at least site launch it looks like.