yeah I know that first one is a sub domain and the second one is just a directory. As you had seen forums section can have a path like www.yourdomain.com/forums/ and it can also be in sub domain like forums.yourdomain.com
I wanna know whatz the diffrence b/w these two terms and where they are applied.
thanks in advance.
I'm not sure I understand... Do you mean how you set it up? The second format is just like any other directory and reflects the physical location on the server, in this case a folder named forums directly inside your www directory.
The subdomain can be mapped to any directory. It depends on your setup how you create it. If your hosting allows subs it should be fairly straightforward in the CP.