When adding sub domains, is it possible to have a seperate admin for the sub domain or do I have to create a new website? Like, if I have example.com and I wish to make test.example.com for someone else, does this require another website? If this is the case, I really don't understand the need for sub domains on an existing site.
You must create a new web site. This is if you like to have a subdomain pointing to the same web site or a subfolder of the web site (using forwarding).