A subdomain can be useful if you wish to "break up" the domain structure of your site, yet still make it obvious that the sites are related.
For example, as is used here - http://support.inetfx.net (where support is a subdomain of inetfx.net)
Every subdomain setup within the control panel will take it's data from a corresponding folder in the wwwroot folder, so if you were to create a subdomain something in your domain example.com, a new folder would be setup in the wwwroot folder called something (or if the directory already exists, this will instead be utilised).
Anything placed in this folder will now be able to be accessed from http://something.example.com (as well as www.example.com/something).
NOTE: Deleting a subdomain will NOT delete the subdomain folder, so they can be removed without any danger to the files stored within them.
