The following is my approach - others may differ.
For my company, a major project is a workspace. If there are major (really big) sub-projects, they may become workspaces beneath the root project's workspace.
Normal sub-projects though may just become a milestone. A Feng Office milestone is not actually a "milestone" in project management terms and may be an unfortunate misnomer - (a project management milestone to me is a single item or goal with a single achievement date, but to Feng Office a milestone is a collection of tasks which need to be performed, otherwise known as a sub-project).
So in each workspace (or project) we establish a milestone (sub-project) with the same name as its workspace, and then we begin to create tasks and subtasks there. If there are multiple sub-projects, we create multiple milestones.
Doing it this way helps us when we are reporting - we can always see the name of the milestone to help us know where a task "lives", otherwise they can get lost if you are reporting across milestones or workspaces.
