nginx – two subdomain configuration

The mistake is putting a server block inside a server block, you should close the main server block then open a new one for the sub domains

server {
    server_name example.com;
    # the rest of the config
}
server {
    server_name sub1.example.com;
    # sub1 config
}
server {
    server_name sub2.example.com;
    # sub2 config
}