A subdomain is a part of a web address which is under the main domain, for instance name.example.com. Actually, even in www.example.com the "www" part is a subdomain since the fully qualified domain name is just "example.com". Every subdomain can have its own site and records and can also be hosted with a different provider if you need to use a certain feature that is not offered by your current service provider. An illustration for using a subdomain is if you have a business website as well as an online store under a subdomain where clients can acquire your products. You can also have a forum in which they can discuss the products and by using subdomains as opposed to subfolders you will avoid any risk of all sites going down when you perform maintenance, or update one of the site scripts. Keeping the websites separated is more secure in case there is a script security breach.