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Let's say I have the following subdomain to my root (mydomain.com): blog.mydomain.com.

Does Google treat the subdomain separately from the root from an SEO perspective?

Is it better to use mydomain.com/blog so that I'm optimizing my root page?

Is there an best-practice RoR approach to rectifying sub-optimization issues presented by the use of subdomains?

+1  A: 

SEO is pretty complicated and changes all the time.

A subdomain will generally be treated as a separate domain for SEO purposes. So whether to place it in a subdirectory or not depends on your overall SEO goals.

Toby Hede