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If the url in the address bar of the browser changes or not depends on the rewrite mode that you use and if you use a rewrite to a directory or a url. If you like to know how the different rewrite modes of apache work, please see apache rewrite guide in the apache documentation.
But in general you should create a new website if a subdomain shall have its own directory as dclardy explained, thats described in the manual as well.
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