There are 4 different ways of creating sub-domains depending on your needs. These are listed in the order of the most common usage.
If you want to direct a sub-domain to a directory of your website then navigate to 'Domains > Manage' click on the 'Details' of the domain you wish a sub-domain for, click on 'Add Forwarding'. In the 'Hostname' to be forwarded change 'www' to your chosen sub domain name (the part before your normal domain name).
If you want to point the sub-domain to a specific IP address you would navigate to 'Domains > Manage' click on the 'Details' of the domain you wish to create a sub-domain for, click on 'View Zone Entries' go to the A records and enter your sub domain as the hostname and point the IP to your chosen destination.
If you want the sub-domain to point to an entirely new website then make sure you have the capacity for another web site in the desired package, go to 'Websites > Add' and fill out the 'Hostname' with the sub domain you wish to use (You should not includ www in the Hostname field as this will automatically work if the DNS is setup for it). You would then enter the domain in the appropriate field and add this in.
If you want the sub-domain to point to an existing website then select 'Websites > Manage' click on 'Details of the website' and 'View / Administer Aliases' then follow the same procedure as before, changing the 'www' part to your chosen sub domain name.