Let's say that you want to create a Split URL test for the website www.example.com (which is your control version). The variation you create for the test is test.example.com. In this case, your test will work on both domains because the root domain of both is the same, that is, example.com.
NOTE: You don't need to enable the Campaign involves multiple domains option while creating a test involving sub-domains, as explained in the example above. However, it is essential to install the VWO SmartCode across all the subdomains on which you want to run VWO campaigns. This facilitates contacting VWO servers to execute campaign settings on the webpages.