Subdomains allow you to denotate to your website visitors that they are viewing a particular section of your website. An example of a subdomain would be mail.google.com. "mail" is a subdomain of "google.com", with a period in between. Generally, subdomains will have a folder on the same server as the main website for all of the subdomain's files.
This tutorial will show how to add a subdomain to your website if it uses CPanel or something similar. CPanel is a very common and popular control panel for websites, and this tutorial will be using screenshots I've taken (myself) from the (interactive) demo on CPanel's website: