A subdomain is a part of a web address which is under the main domain name, for instance name.example.com. Actually, even in www.example.com the "www" part is a subdomain because the fully qualified domain name is just "example.com". Every subdomain can have its own site and records and can even be hosted using a different company if you want to use some feature which isn't provided by your current provider. An illustration for using a subdomain is if you have a business site along with an online store under a subdomain where customers can buy your products. You can even have a forum in which they can discuss the products and by using subdomains rather than subfolders you will avoid any probability of all websites going down if you perform maintenance, or update one of the website scripts. Keeping the sites separated is also less risky in the event of a script security breach.