Domain Name Formatting Confusion

When correctly making a domain name line up with a file on a server from what I understand I have 2 formatting options.
1: www.example.com/server/folder/file
2: www.server.example.com/folder/file
My question is this. When is the proper time to put a file/end goal page as a second level, third level domain. Or put everything after the top domain? I have tried to research the proper way to do this but I am struggling to know the name for everything after the .com "/server/folder/file"