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A subnetwork (subnet) is a separate and identifiable portion of an organization’s network, typically a local area network (LAN) comprised of all the machines on one floor, building or geographical location. Having several subnets allows an organization to be connected to the Internet with a shared network address, which means that all the machines on a given subnet have the same prefix to their IP addresses.
The practice of dividing a network into subnets is called subnetting.
Techopedia Explains Subnetwork (Subnet)
The subnetting process involves separating the network and the subnet portion of the IP address from the host identifier, which consists of the network prefix, the subnet number (also called a subnet mask) and the host number. The network prefix identifies the entire network, the subnet number identifies a portion of the entire subnetwork and the host number identifies the host computer.
Data traffic between subnets is controlled by gateway computers called routers, which act as physical borders between subnets.
