A Submarine (or Subs, for short) is a dangerous Naval Unit as it is capable of diving underwater to avoid detection. However, doing so increases the amount of fuel that it burns from one unit per day to five units per day, and it only has 60 Units of Fuel at the maximum.
With an enemy Submarine in the water, no allied ships are safe, especially when it dives because the only way to detect an enemy Submarine after it dives is to run into it. Only a Cruiser or another Submarine can fire on a submerged Submarine.
Submarines can be deployed for 20,000G each. They can only fire on Naval Units, and can do so very effectively except for Cruisers, which can defend itself against a Submarine assault and not take a lot of damage.
To preserve fuel, don't have your submarine Dive until it is within range of enemy fire. Also, during Fog of War, you can have your Submarine surface to preserve fuel whilst it hides in a Reef.