A subdomain is one way of organizing and separating content on your site. You're already familiar with the concept of subdomains, even if you don't know it. Consider the Agnes Waypoints site at [http://agnesscott.org|http://agnesscott.org].
As you browse parts of thesite, you'll notice that the domain name will change. When you're looking at the Agnes Waypoints documentation web site, Waypoints documentation the URL is longer and indicates you are on the docs subdomain.
Domains serve two purposes: they help to organize the site from a technical perspective, but they also serve as indications to the users that they are in a new/different space. As you work on your site, you're welcome to create as many subdomains as you like, and in each subdomain you can actually create a distinct, individual web site.
You can learn more about how to set up your own subdomains here.