Why Subnet ?

Networks are often grown in place, rather than created as a whole, starting with a few hosts connected by a hub, then more hosts being added along with more hubs as the network grows. Hubs rebroadcast any traffic received at any port to all ports on the same network, causing a huge amount of extra traffic to be handled by every host on the network and consuming large amounts of bandwidth. Also, any security breach on the network can reach any host on the system.

Breaking up the network into small segments interconnected by hubs, with each hub connected in turn to a router reduces traffic, as the router will determine which packets are relayed across segment boundaries, and containing 'local' traffic to a single subnet. Segmenting can also increase security by limiting the access to a single subnet in the event of a breach, if the proper configurations are set on the routers. Certain paths can be disallowed, certain ports/protocol combinations can be blocked from passing through the routers - there are lots of options. A good book on TCP/IP and Network Design can give you a lot of pointers - it's a complex subject, but worth learning.