The subconscious mind is, as its very wording indicates, the layer of consciousness just below waking life.
It's where memories are kept, processed, and reused in dreams, lucid dreams, and astral projections/out of body experiences. Whenever you hear about somebody "blocking out" bad memories, what they're actually doing is simply abandoning them to the subconscious mind, which doesn't play nearly as prominent a role in everyday life as the conscious mind.
The subconscious mind is responsible for REM sleep (and therefore dreams), various forms of hallucinations, mental breakdowns, various mental diseases/disorders such as schizophrenia, bipolar disorder, and mental disassociation. It is a vastly unexplored territory of the human mind, and most people aren't even aware that it exists. It's not the most buried level of consciousness, however -- that distinction belongs to the superconscious mind. Both the sub- and superconscious mind are what hypnotists draw from when they work work their patients, as both make up the bulk of our memory systems and synapses.
Every television show we've ever seen is stored in our sub- and superconscious minds, every book we've read, every detail of every sexual encounter, major life change, and every imagining that we, as humans, have been inspired to have. It is, by way of comparison, an infinite hard drive for the brain, while the normal conscious mind is merely the proxy server. The entirety of our childhoods are stored in perfect detail there, as well as whatever knowledge we, as humans, possess of our past lives, if such things exist. The problem with these two types of consciousnesses is that beyond normal consciousness, anything deeper is vastly difficult to retrieve. This is why our dreams are often so odd -- they're mostly made up of random renmants of sub- and superconscious memories, or distortions thereof.
These memories can be retrieved, however, mostly intact, either by a highly trained hypnotist, by deep meditation, by astral projection or by clairvoyance. I'm not talking about John Edward bollocks here, or Miss Cleo. The stuff that can be salvaged from higher levels of consciousness can be frightening and often exhausting to those seeking to retrieve it. I've found that regular astral projection is very helpful in recovering these memories. Astral projection, in itself, is no piece of piss, and takes years to learn how to do.
Our higher levels of consciousness are accessible by lowering the alpha waves in the brain, which can be achieved in a number of ways, the most popular probably being astral projection, as long as you know what to look for while "out."
Both these levels of consciousness can be harmful, though, as they are also the main target of brainwashing, but that doesn't seem to be to common now as it was during the Cold War and the experiments that it brought dealing with mind control, etc.
However, both can be beautiful, highly disturbing places (particularly the superconscious, where all your demons, all your closet-residing skeletons are kept), if you ever find yourself privileged enough to see them for yourself.
The following are books that helped me understand enough about the subconscious to write knowledgeably about it.
Astral Dynamics by Robert Bruce
Adventures Beyond the Body by William Buhlman