Forum › White Hat SEO › Which one is best for blog SEO: subdomain or subfolder? › Reply To: Which one is best for blog SEO: subdomain or subfolder?
Practical tests point to subfolders having the slight edge but really you can use either. It should be an issue of which is more relevant to your site. However, I recommend against using a lot of subdirectories on a domain as it could lead to a limitation of how much ranking value your main domain could achieve.
The site you are referring to most likely is suffering the results of not properly linking between the subdomain and main domain.