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It is indeed a shortcoming of OpenFire; one that won't be fixed [1].

As far as the XMPP protocol is concerned, the concept of sub-domains doesn't matter. It's useful for human users when configuring servers though.

Prosody for example allows running a multi-user chat service on example.com. And there's an undocumented feature which let's you have user@example.com be a user, and room@example.com be a chatroom.

[1] http://issues.igniterealtime.org/browse/OF-162

I've used jabberd2 and ejabberd, neither of which had that constraint. Can't remember from my experiments with OpenFire or Prosody.

Not a problem with ejabberd.