There are a number of ways to do this, but the easiest is probably to use the “Simple Vhost” module. On Ubuntu, you can enable it by running:

sudo lighty-enable-mod simple-vhost
sudo service lighttpd force-reload

Next edit the file: /etc/lighttpd/conf-enabled/10-simple-vhost.conf Here you can set the base “server root” and the “document root.”

simple-vhost.server-root = "/var/www" 
simple-vhost.document-root = "/htdocs/" 

In this example, domains found in the /var/www directory will serve content found in the /htdocs/ directory. For example, if your sub-domains are blog.example.com and www.example.com you would put the files you want to serve in the coorisponding directories:

/var/www/blog.example.com/htdocs/
/var/www/www.example.com/htdocs/