How do I add sub domain and make it point to a certain directory?

I want to add subdomain dev.mydomain.com that point to /var/www/html/dev.

I currently have a main domain and my server is Debian 8.2 x64 running on LAMP. My apache configuration /etc/apache2/sites-available/000-default.conf which I think is correct file to check:

<VirtualHost *:80>
        #ServerName www.example.com

        ServerAdmin webmaster@localhost
        DocumentRoot /var/www/html

        <Directory /var/www/html>
                Options Indexes FollowSymLinks MultiViews
                AllowOverride FileInfo
                Order allow,deny
                allow from all
        </Directory>
        #LogLevel info ssl:warn

        ErrorLog ${APACHE_LOG_DIR}/error.log
        CustomLog ${APACHE_LOG_DIR}/access.log combined

</VirtualHost>

# vim: syntax=apache ts=4 sw=4 sts=4 sr noet

It looks barehand because I removed almost all comments. Not sure where did that vim line come from. My site works, my domain points to /var/www/html. (Off-topic, i would like it to point to /var/www/ but if this is default, then it must be correct and common way)

Anyway I tried looking up how to add sub domain, found this reply on relevant thread but I don’t know if it’s okay to uncomment ServerName and set it as dev.mydomain.com and change directory from var/www/html to var/www/html/dev because that’s what everyone is saying. It just doesn’t make sense to me. If I do that, then my main domain and main directory configuration will probably cease to function (my guess).

I also do not know what to type in droplet cpanel in domain settings to make this work. Advice on that will be very helpful.

Can you advise me how to add a subdomain dev.mydomain.com and make it point to var/www/html/dev/ folder?