Locate and click on the "Subdomains" icon under the "Domains" category.
Enter the name of the subdomain, and then provide a Document Root. The Document Root will be a folder that resides within your main domain's root directory, and will be the folder that loads when the subdomain is accessed. Coincidentally, the website you develop at subdomain.yourdomain.com can also be accessed via yourdomain.com/subdomain.
Click the "Create" button and the subdomain will be created.