You simply create a new folder within your main file structure – the one with the administrator/modules/components/plugin folders – name it “rave” (or whatever you want) and download the all of the Rave template files into it (just as you would any new template).
The path will be http://www.mainsite.com/rave … with “mainsite” being whatever you named the original site. You then follow the very same installation procedure as you would for any new Joomla template.
For example … if I have a main website called news.com – and I set up a subdomain called “weather,” the path to the subdomain site would be http://www.news.com/weather
Make sense?