@eKulz - You really don’t need the CNAME entry. You can use a WildCard DNS entry to handle all sub-domain routing, which will prevent you from having to handle multiple DNS entries over time and allow you to do the configuring at the web server level.
Adding an A entry using an asterisk ( i.e. * ) and setting the hostname to your Droplet IP will route all requests for sub.domain.ext to domain.ext unless the sub-domain is defined in your web server configuration or a directory with that name exists.
As an example, I’ll use NGINX. NGINX will require that you setup your server block to use the WildCard Entry by defining it. As you can see below, normally you’d use www.mydomain.com, though to ensure proper routing, we use an asterisk - save & reload NGINX.
server_name mydomain.com *.mydomain.com;
Now, if we go to sub.mydomain.com, we’ll see the content of mydomain.com. If we wanted to ensure sub.mydomain.com displayed its own content, we’d simply setup a server block for it.
server_name sub.mydomain.com www.sub.mydomain.com;
Since we have a WildCard DNS entry in place, we don’t need to create another DNS entry, regardless of how many additional sub.mydomain.com server blocks we create (i.e. sub2.mydomain.com, sub3.mydomain.com etc).