A subtotal item can be inserted on any line of a transaction and will subtotal the items above it, up to the next subtotal line.
This allows you some added flexibility when calculating discounts. If you want to calculate a discount on the entire transaction, you can enter a subtotal line and then enter a discount item after it. Discounts entered above a subtotal line are figured into the subtotal. Discounts entered after the subtotal line apply to the subtotal amount.