301 Redirect of subdomain?

[SMG-Texas]

Fellow Mozzers,

I'm having a hard time wrapping my brain around a redirect issue and thought it was worth posing the question to the Moz community.  I did a search first but couldn't find the exact answer I was looking for.

How does a 301 redirect work when you redirect a sub domain example.homepage.com to www.homepage.com but you keep the sub directories of example.homepage.com/page-1 active and are trying to rank them?  I'm dealing with a current project where this is happening and this doesn't make sense to me, to redirect the subdomain if you're also trying to rank/create search traffic for pages, sub directories on example.homepage.com. This also get's into the debate of if a sub domain site is viewed as it's own website and therefore has to rank itself.  If this is true, it seems like we're kind of killing the authority of the site by redirecting it.

Additionally, www.homepage.com has a much stronger link profile than example.homepage.com

I hope this makes sense.  Any thoughts are appreciated.  Thanks for your time.

[FedeEinhorn]

I agree, it doesn't make any sense. I would redirect everything instead to a subfolder:

example.domain.com -> domain.com/example

example.domain.com/page-1 -> domain.com/example/page-1