Free Domain vs Free Subdomain: The Difference
Domain vs. Subdomain. Which is better for your web site? Why is a domain better than free subdomain, and why it doesn't really matter?
You will hear different opinions on the web, regarding why it is better to have your own domain name. It's true that when you register your own domain, that domain is totally under your control. You can set your own whois information, which usually needs to be correct. And there it stops. From a search engine's perspective, there is very little difference whether you have your site accessible on a domain or a subdomain, especially when the latter is short and not irrelevantly keyworded!
If you find that hard to believe, go ask this question on any Google, Yahoo, or Bing insider's forum. You might be surprised of the answer you'll get!
Again, there is no difference between a domain and a short free sub-domain. If you can manage sub-domain's DNS records pointing it to your server directly, then that subdomain is regarded just as the costly domain, and it can rank just as well. The most distinguishable difference is that the "owner" of the subdomain (you) is much harder to find as there is no mandatory whois information to fill in.
Skeptics can examine the following list of prominent websites that serve from subdomains and which easily rank first place in SERPs for their targeted keywords: Dictionary, Subdomain (Wikipedia), Google Blog, Apple Shop, The Best Page In The Universe, web app security forum, Facebook API, ...
Because of this appealing conclusion, we will use the terms like free domain, free short subdomain interchangeably throughout the website.
Protip: domain.com is really a first-level subdomain. Technically only the .com part is a TLD.
Some differences also described in Is Free Domain Bad article.