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A SharePoint site collection is a hierarchical set of sites that can be managed together. Sites within a site collection have common features, such as shared permissions, galleries for templates, content types, and Web Parts, and they often share a common navigation. A site collection contains a single top-level site, and any number of subsites organized in a hierarchy. A subsite is a single SharePoint site within a site collection. A subsite can inherit permissions and navigation structure from its parent site, or these can be specified and managed independently. Creation of subsites can be delegated to users of a site collection, but creation of site collections must be performed by a service administrator.

Reference: http://technet.microsoft.com/en-us/library/cc742548.aspx

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