From my understanding, when you create the new subdomain, it creates a new folder under that name, That fold is exactly the same as the Public_html folder. Well, that is how it has worked on the servers I have created them on. I think you are also asked what folder you want them to have access to when you create the FTP account. Its been awhile since I played with it. Also, if we wanted to hide the content of any folder, we put a blank index file in it so no one can see the content of the folder.