I've told you how to use a subdomain because you don't understand my step-by-step instructions with using url-paths. Unfortunately it appears your lack of understanding is due to a reliance on "user friendly tools" instead knowledge of how the web site server software works.
Going over this again:
Your domain is 'example.com'
And you have users "bob" and "alice"
When setting up 'example.com' as fully-hosted, DreamHost tell the web server software (Apache) to look for files in a "Web Directory" of the "FTP / CGI runs-as user". In this case that user is bob and the "Web Directory" is going to be '/home/bob/example.com' as a result. This means the web server software is told to look in '/home/bob/example.com' for files when someone browsers to 'http://example.com/'
Now the next thing you need to understand is url space. The part after the hostname is call the url-path and for web sites most of the time it looks like a directory path. The web server can interpret this path in different ways but the default way is to match it to a file system path starting with the "Web Directory". You must understand though that a url-path is not a file system path but it can be mapped to a file system path or interpreted other ways.
In order to do what you want, you have to setup an exception to the default behavior of mapping the url-path to a file system path relative to the "Web Directory". In order to do what you want, you have to tell Apache to map certain url-paths (those beginning with /alice/) to a directory unrelated to 'bob'
You have 'alice' setup with her home directory of '/home/alice' so create a directory for 'alice' called '/home/alice/uploads' which will be the directory we will tell Apache to look for the 'alice' files.
With Remap Sub-dir will tell Apache that for url-paths starting with /alice/ we want it to skip looking at 'bob' files and to look at 'alice' files in particular '/home/alice/uploads' and that way http://example.com/alice/page.html is mapped to /home/alice/uploads/page.html
I'm sorry but if you have a hard time understand the process. The actual server software documenation is available here: Apache documentation - Alias directive
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