When you create a subdomain via DreamHost's panel, it will automatically make the folder structure for you.
I suspect you're confused because other webhosts will put a subdomain in a folder off your main site (i.e subdomain.example.com will run out of /home/user/public_html/subdomain)
For DreamHost, we segregate our domains and subdomains a little more.
Your main site (example.com) would be in /home/user/example.com
Your subdomain will be in /home/user/subdomain.example.com
Does that help?