A subdomain is a part of a web address that is under the main domain, for example name.example.com. Technically, even in www.example.com the "www" part is a subdomain because the fully qualified domain name is just "example.com". Each subdomain can have its own website and records and can also be hosted with a different provider if you want to use a specific feature that is not provided by your current provider. An example for using a subdomain is if you have a company site and an online store under a subdomain where clients can acquire your products. You can even have a forum where they can discuss the products and by using subdomains instead of subfolders you'll avoid any chance of all websites going down if you perform maintenance, or update one of the site scripts. Keeping your sites separated is also less risky in the case of a script security breach.
