The argument over sub-domains versus sub-directory is simple to sum up. Sub-domains divide domain potential/effort into 2 (two) while sub-directories do not.
Sub-domains are separate sites in a very real sense though now that Google has gotten smarter on this lately, some credit is given to the parent domain for the activities of the sub-domain. But is it not enough? No way! The effect is slight. You are still dividing your potential onto two separate sites.
It is far better to use a sub-directory within the parent domain and has always been the case.
However, if some content dilutes the SEO prowess of the parent domain, then it may be better to use a sub-domain for that content. Often, this is content that confuses the domain topic by going off-topic. This is rare and the content going off-topic would have to be somewhat extreme. For example, it you have a Linux tech blog and include fitness and nutrition content, that would be a good candidate to move to another location- perhaps even another parent domain rather than a sub-domain.
The idea behind not dividing your site is to take advantage of short-term trend and long-tail search that would drive traffic to your site. The more content, the more potential. It is really that simple.