Managing my URL for my 2013 SharePoint site

I am reading about SharePoint 2013, but I got confused on what are the major differences when building the following in respect to the URL that will be produced:-

1. Site

2. Site Collection

3. Sub sites

Now when I want to create new site collection I have to specify its URL, which will be constructed as follow:-

Hostname + Drop down list + [text to enter]

If I can create new site collection I have to show from a drop down list so this means that site collection should exists below a site? And when building a sub site instead of a site collection what the URL will be? BR