The answer is both a yes and a no!

Basically I do have an idea that multiplexing works on the principle of rapid strobing or 'ON and OFF'

I was wondering how do I achieve the same using a 8051 like the AT89C51.

For eg

If I had to display a number like 12345 using a set of 5 seven segment displays,and one microcontroller, will the image hold by using the method you have suggested?

Regards
Pramod