Having a solid understanding of Managed Paths is a definite must for any SharePoint administrator.

A managed path is defined as the path in the URL that is managed by SharePoint. As an example, sites is the managed path in http://MyServer/sites/Ayman. Managed paths cannot be limited for use by specific security groups, nor can they be targeted directly with audiences. They are simply a way to organize a large quantity of site collections.
There are 2 types of managed paths (Explicit and Wildcard). Explicit managed paths allow you to create a single site collection at that specific path only. Wildcard managed paths allow you to create multiple site collections using that managed path.

Here are some examples…

Explicit Managed Path: Accounting
Wildcard Managed Path: Departments

Site Collection URL created using the explicit managed path: http://company/accounting
Site Collection URL’s created using the wildcard managed path: http://company/departments/accounting,http://company/departments/hr, http://company/departments/it

As you can see the “departments” wildcard path acts as a placeholder to create site collections related to “departments”. The reason why i say it represents a phyiscal hierarchy is because if this were a normal asp.net web site there would be a physical folder structure on the hard drive somewhere and departments would be that folder. What managed paths allow you to do is represent that physical structure in the URL for the end users and allow for organization on the administrators part. Plus everything in sharepoint is stored in a database, so there are no physical heirarchies. Managed paths allow you to create that feel.

Now, Can you create a site collection under another one ?
Try to answer