A subdomain is a part of a web address which is under the main domain name, for example name.example.com. Actually, even in www.example.com the "www" part is a subdomain given that the fully qualified domain name is only "example.com". Each subdomain could have its own site and records and can even be hosted using a different company if you wish to use a feature that isn't offered by your current service provider. An illustration for using a subdomain is if you have a company website along with an online store under a subdomain where customers can buy your products. You can even have a forum in which they can talk about the products and by employing subdomains instead of subfolders you are going to avoid any probability of all sites going down if you perform maintenance, or update one of the site scripts. Keeping your websites separated is also more secure in case of a script security breach.