Subsites Nest. Use As Few As Possible.

Subsites nest. They are like cockroaches or mice in that regard, because if you do not keep a tight eye on them, they can nest limitlessly.

This is handy, because they inherit their permissions from the main site. In theory, you need only permission the main site correctly and away you go; you can let the subsites inherit their permissions, and each one can be used to organize different material. Broadly correct use means you really can do this - finance can have a different sub-site than IT, and they can each be permissioned as separately as necessary. The trouble comes in later, when you meet your clients and become aware of their commitment wholly to bad permission structures. 

Anyone who works with Windows systems is already aware that MS sets permissions funny. Here is the speculation: because MS works with old, well-established teams, each team manages their permissions settings for their software a little differently, and they probably have no core permissioning squad with overreach for all things. So! MS stuff Sets Permissions Funny, and that seems normal until you begin working in a UNIX environment. Sharepoint subsites inherit this tendency, to break permissioning.

The other thing is that subsites under the main site inherit different permissions and different "levels" based on a variety of non-specified variables. The site itself will be fine, but the "level" it is at under the main site will affect how the subsite displays on the quick-launch. The Main site is generally counted as Level 1 (except when it is not, such as while you are in a subsite....) and the created sites are then Level 2+.

The trick here is that the quicklaunch automagically sets whether it is displaying sub-sites or pages or both, and then it gets confusing fast. Folders, in the URL, are sometimes at the same level as subsites, but they are not subsites, so they get tagged differently in front-end navigation. Or at least, they used to do; in Sharepoint 2010, the navigation is on generally shaky ground.

Because of the dodgy navigation issues, and how difficult it is to prevent Folder and Permission Nesting, it is for the best to limit the depth of subsites you support to one or two at most. At level 3, the quicklaunch becomes deeply strange, and at level 4 you basically have to rewrite everything because it ceases to inherit properly. 

Best Practices So Far:

1. No folders, ever, unless you REALLY need them for permissioning a document set with shared metadata.
2. Depth of no more than 3 subsites. Here is how your quicklaunch will come to look otherwise:
1. Main Site
1. Departments
1. Finance
2. IT
3. Collectables
1. This is all good
2. Hey no problem
3. Wait hang on something's dodgy here
4. Hey what's this door
5. AAUAUAUAGUGH GIVE ME BACK MY LEG
1. *smear of blood, something about minotaurs*
2. Projects
1. This needs collaboration
2. Everything is totally chill!
3. Man, this is such a convenient document sharing technology
4. I wonder where Rachel McPropellerGallery got to?
5. She was always so cool.