If we type "www.cnn.com" into the address bar of our browser to visit the CNN website, then we are using what is known as a subdomain.
Some people prefer to call this a "canonical", and we have also seen the term "third-level domain" (the logic is that ".com" is the top-level domain, "cnn" is the second level, and "www" is therefore the third).
Certain countries, including the United Kingdom, have top level domains consisting of two "parts", e.g.: ".org.uk" or ".co.uk".
The domain name "mycompany.co.uk" is therefore a "real" domain name, not a subdomain of "co.uk"! (Here, "sales.mycompany.co.uk" would be a subdomain.)
Machine NamesSubdomains are sometimes used to identify individual computers, each having an IP address of its own. In that case, the term "machine name" is sometimes used instead of "subdomain".
A company could have two servers called "marketing.somefirm.com" and "accounting.somefirm.com", for example. The two computers would serve different departments, and contain different information.
Subdomains For Load BalancingIt's also possible to have multiple subdomains that identify different computers containing the same information.
This arrangement is often used for extremely busy sites. A visitor types in: "www.busysite.com", and a mechanism called load balancing sends the visitor to one of the available computers (say, "www2.busysite.com" or "www7.busysite.com").
Organizing InformationIn most cases, however, subdomains are simply used to organize information with a website. An on-line shop could use the subdomains "books.someshop.com", "flowers.someshop.com", etc., to store related information together.
An excellent example of a site that uses subdomains for this purpose is About.com. If you visit their site, you will notice that they use different subdomains for all of the topics they cover (e.g., "antiques.about.com" and "autorepair.about.com").
Of course, they could have used subdirectories instead ("about.com/antiques/"), but the use of subdomains makes it easy for them to move a topic to a dedicated computer if it turns out to be very popular.
For a large, busy site like About, this "scalability" could be an important benefit. For most other sites, however, subdirectories work fine; they don't need the "200 subdomains" included in some "advanced" hosting packages.
Subdomains: No Registration Fee!One key point to keep in mind is that, unlike domains, subdomains can be created "at will". For any domain, you can create as many subdomains as you like; you do not have to go to a registrar and pay an annual fee for each of them.