A subdomain website can be treated as an independent website. It is actually “sub-web sites” within your web site and different from its main website.
If your main website URL is:
http://www.domainname.com
Then The URL of a sub-domain looks like this:
http://subdomainname.domainname.com
The main purposes for subdomain websites depend on the necessity of a website.
SEO Purpose
Some websites create subdomain sites for the purpose of SEO strategies. It has been swimming around in the SEO world that a subdomain site can avoid web aging algorithm, bring more backlinks to main website and transfer main site’s credits to the new site to benefit both sites. However, this is not proofed and clarified by search engines so far.
Besides, Google’s Matt Cutts have stated that regulations to Google’s search algorithms have removed many of the advantages given to sites organizing content using subdomains rather than subfolders.
A website with multiple database
Sometimes a website needs to have multi database instead of one to run and support its business.
If a website has massive information, images, videos, plugins, its loading speed will be impacted and slow down accordingly. In this case, a site can develop a subdomain site to connect with its main website to fulfill the mission of business.
Complete different content
A subdomain can be useful to separate out content that is completely different.
For example, if a site contains a training section including big volume of videos, it may be a good idea to create a subdomain site holding all its training course videos in another database to fulfill the mission of its business.
However, the business and information provided by subdomain site should be an undividable part of the main site, and being integrated with its main site as a whole business for its visitors and customers. There is no way for the company to separate its training subdomain site with its main website, as the subdomain site is the most important part of its business.
Business with different branches in different regions
Subdomain can also be used for the companies or businesses with different branches in different regions.
If a company is running its business geologically in different regions worldwide, it needs individual database to run and support its business.
The good examples of this are franchise and membership websites with huge volume of members and followers. Also, in some other websites like Facebook and WordPress, members can set up their own account through the main website to build up their own subdomain sites where they can set up their own database. As a result, members of these websites can maintain and manipulate their subdomain site independently. Therefore, membership being able to log in and maintain independently is another feature of subdomain websites.
Different languages for site content
If a business has multiple geographic regions, and its clients search for its products or services within each region, it requires different database to serve its customers with different languages. In this case, subdomain sites are good choices and non optional.
A good example of this is Yahoo. It lets visitors to choose a language based on their region. If I am a user living in Canada, for example, Yahoo will present its subdomain site to me like this:
(https://ca.yahoo.com/)
If I am a visitor in UK, then:
(http://uk.yahoo.com/)
Subfolder
Subfolders, also referred to as Subdirectories, are any extension of the main domain. If your domain is a folder that holds your site files, a subfolder is a folder held within this main folder.
For example, in the URL www.firstsitesolutions/about, the word “about” is a subdirectory of the main domain.
Here are the reasons for why and when a subfolder makes good sense:
Fully control your website
As you create subfolder on your main website, you are personally responsible to collect and maintain content for every region. Moreover, people running the regional business for each subdirectory would not be able to modify the website to optimize it for their region.
Turn a static website to a dynamic (data driven) one
Static Web pages contain fixed codes and the content of each page does not change unless the Webmaster updates it manually. On the other hand, dynamic web pages changes automatically by updating a database record.
Nowadays, many people want and hope to build dynamic (data driven) web presences to accommodate updated information and interact with their audience actively.
If a website is created and powered by a content management system (CMS) such as WordPress from the beginning, it is running on the right track.
However, what if a static website that contains web pages with fixed content wants to turn into a dynamic one?
A smart way to achieve this is to create a subfolder powered by a CMS under its main domain.
For example, you may want to host a blog or a forum alongside your static website. To do this, you need to create a subfolder under your main domain name. If your main domain URL is http://www.maindomainname.com, your subfolder may look like this:
http://www.maindomainname.com/blog/
Or
http://www.maindomainname.com/forum/
Then you can install a CMS like WordPress in this subfolder. Now you have set up a dynamic website with dynamic pages, which can be updated by simply modifying a database record.
In conclusion
There is really no clear-cut answer to this topic. Simply put, If you want to fully control over your website or you want to turn a static website into a dynamic (data driven) one based on the existing contents, I suggest using a subfolder. If you want to build entirely separate content with its own equity, then launch a subdomain.