Step 7 - Variable Length Subnet Masking
When an IP network is assigned more than one subnet mask, it is said to a have a variable length subnet mask (VLSM). This is what is required when you are subnetting a subnet. The concept is very straightforward: Any one subnet can be broken down into further subnets by indicating the proper VLSM.
What must be appreciated about VLSM is how RIP 1 routers work. Originally, the IP addressing scheme and RIP 1 routing protocol did not take into consideration the ability to have different subnet masks on the same network. When a RIP 1 router receives a packet destined for a subnet, it has no idea of the VLSM that has been used to generate the packet address. It just has an address to work with without any knowledge of what CIDR prefix was originally applied - and therefore no knowledge of how many bits are used for the network address and how many are for the host address.
A RIP 1 router would handle this by making some assumptions. If the router has a subnet of the same network number assigned as the local interface, then it assumes the incoming packet has the same subnet mask as the local interface, otherwise it assumes there is no subnet involved and applies a classful mask.
The relevance of this is that RIP1 only allows a single subnet mask, making it impossible to get the full benefit of VLSM. You must use a newer routing protocol like Open Shortest Path First (OSPF) or RIP2, where the network prefix length or mask value is sent along with route advertisements from router to router. With these in use, it is possible to use VLSM to its full potential and have more than one subnet or sub-subnets.