The subset list (#E2 Employees: Active?) was created in the #E2 Employees List. Why is it that it did not appear under the larget #E2 Employees list and under the --- Subsets ---(i.e. Subset list). Please refer to the screenshot below.
This is a great question and one that is asked often.
You're really close. I think, like many people, you might have gotten confused between a list subset and line item subset.
A line item subset converts line items into a list and becomes visible in the "subset" section.
You can find the list subset two tabs over from the grid view.
When you build a new module you can select that subset from the list as shown in this screenshot.