Actually a subdomain is subdomain.domain - domain/subfolder is a folder structure (although typically in the hosting back end you'll find the subdomain placed as a subfolder of the public root folder).
The theory with subdomains vs subfolders is a subdomain is "seperated" from the main domain (effectively a new web area as such), whereas subfolders still form part of the domain they're a part of.
Subdomains tend to have content that is either totally different from the main domain (e.g. in a business site you might have your main content in the main domain and blog content in a blog.domain subdomain), or is a different representation of the main domain (such as mobile content in a m.domain subdomain).
The theory with subdomains vs subfolders is a subdomain is "seperated" from the main domain (effectively a new web area as such), whereas subfolders still form part of the domain they're a part of.
Subdomains tend to have content that is either totally different from the main domain (e.g. in a business site you might have your main content in the main domain and blog content in a blog.domain subdomain), or is a different representation of the main domain (such as mobile content in a m.domain subdomain).
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