So I'm adding a blog to my site and was wondering if it makes any difference between blog.domain.com OR domain.com/blog? Perhaps they hold different link values? i.e. a link to blog.domain.com is better for your root domain than a link to domain.com/blog? Or maybe they're both the same? Either way I'd love to know....
You are referring to domain or directory... here is the discussion http://forums.digitalpoint.com/showthread.php?t=974610
Subdomains are treated as separate domains for SEO purposes. This can be a good or bad thing depending on what you are trying to get out of the page. For example if the content is extremely different from the existing content, you may want that to be a subdomain.
If it's the same kind of content then I'd use domain.com/blog as this indicates that your blog is part of your main website. Whilst a sub domain shows a lesser indiction of association.
Search engine spider treat subdomain as normal url. Spider or crawler can not differentiate domain & subdomain.