The Wikipedia entry for Subdomain answers both questions:
A subdomain is a domain that is part of a larger domain; the only domain that is not also a subdomain is the root domain. For example,
west.example.comandeast.example.comare subdomains of theexample.comdomain, which in turn is a subdomain of the com top-level domain (TLD). A "subdomain" expresses relative dependence, not absolute dependence: for example,wikipedia.orgcomprises a subdomain of theorgdomain, anden.wikipedia.orgcomprises a subdomain of the domainwikipedia.org.
In theory this subdivision can go down to 127 levels deep, and each DNS label can contain up to 63 characters, as long as the whole domain name does not exceed a total length of 255 characters. But in practice most domain registries limit at 253 characters.