hmm there are two answers here.
The question is where your dns is hosted. If you host your own dns, and thus e-smith is your dns server, you can make any dns subzone you want. Read the dns howto and so on.
If you have dns hosted somewhere you should make inquiries there as to how they do subdomains. This is really a question about how dns works and not how e-smith works?
Or do I miss something
hc?