Subdomains.what?

[Champak]

Can someone please clarify what the purpose of a subdomain really is for me, and what does it really serve? I look, and look, and look, and try to figure it, but it just doesn't make sense to me. Why have "forum.blah.com" or "ecommerce.blah.com" instead of just "blah.com/forum" or "blah.com/ecommerce"? Is it some type of plus for search engines or something? Am I missing something?

[physics]

For a small web site it can be a matter of preference or a desire to keep the URLs more uniform. For example, maybe I have a site that talks about sports and world news.
I could do:
example.com/sports/news
example.com/world/news

Or:
sports.example.com/news
world.example.com/news

Personally I like the subdomains better. But for a very large network like a university subdomains make sense becuase they need emails like [e-mail] and also with subdomains the whole subdomain can be pointed at a different ip address and server so the physics department can get the url physics.example.edu This can actually be done with subdirectories also but it would be more confusing for everyone (people would have to remember to always put ./physics/ before their page names for the department, etc).