More notes from the field: this came up the other day -- how does one decide whether a request for a new site should be created as a sub site or as a new site collection?
First, it helps to remember that site collections and sub sites are primary levels of scope in SharePoint. A site collection is a hard boundary that has it's own set of galleries, quotas, storage, navigation, and security groups. Sub sites share all of those things within their containing site collection.
In addition, site collections are stored in a structure that is flat -- usually they are all found under the /sites or /personal managed paths. Sub sites are usually organized heirarchically within a site collection, for example: /sites/hr/benefits.
Once you understand those things, you can infer a decision matrix to help you determine whether or not a request should spawn a new site collection or a sub site within an existing site collection.
Here's a list of possible questions for such a decision matrix. Yes answers imply you should create a new site collection, No answers imply you should use an existing site collection:
Does this site request...
...potentially contain more than 5 GB of data (5 GB is my default site quota size)?
...potentially require more than 20 SharePoint security groups (or contain > 200 unique users or AD groups).
...have an owner who is capable of becoming a site administrator but does not already own other sites?
...exist as part of a business structure that might get re-organized in the forseeable future?
...require custom workflows, web parts, content types, list or site definitions, or other deployed features that are not part of your standard site package? (exclude SharePoint Designer workflows since they are no-code)
...represent a function that crosses organization boundaries?
...not logically fit into an existing site collection?
Scoring: Tally your yes/no/maybe's from above. If there are more yes's than no's the request probably belongs in a site collection, if not, then it probably should be a sub site in an existing site collection.
Feel free to add questions or submit them to me so I an append them here -- I just submit this as a starting point.
Thanks,
Jeff