Resellers can create users, which may create one or more domains, depending on their hosting package.
One or more of those domains, including the one you set up when you set up the user, can be what most people would call a third level domain; something such as xav.example.com.
But then if example.com isn't hosted on your server you'll have to create DNS records wherever example.com is hosted. Or have whoever is hosting example.com delegate authority for the subdomain to you, in which case the automatic DA DNS setup would just work.
Does that answer your question?
Jeff