When you add a custom domain, you have the option to use a subpath. This option is for serving multiple sites under the same domain name at different paths. The main site must exist on the base URL before sites can be added at subpaths.
Setup of this site is dependant on the site that sits on the root directory. If this is configured correctly, no additional setup is required.
Attaching a site to a subpath does not change the urls. The site files are hosted as is, which allows you to refer to the other sites files. It is recommended that you build all sites as if they exist on the root directory and use a tool like Reseed to change the urls programmatically after the build.