Serving multiple sites from a single server is a matter of configuration. Configure DNS to point your domain & subdomain to your server’s IP. Install your applications wherever you choose, being mindful of appropriate permissions. Then configure your web server to serve requests to your domain or subdomain from the location where you have installed the application.

For applications requiring a database server (MySQL/MariaDB/Postgres/etc), you will need at least a 1 GB droplet. You will run into memory problems with anything less. That will probably be sufficient to run what you are proposing. If it turns out that it’s not enough, it’s easy to move up to the next larger droplet.