Difference between subgrade layer and fill/embankment in road construction:-

The top 500 mm of the prepared foundation layer immediately below the pavement,
designated as subgrade, can be made up of in-situ material, select soil, or stabilized soil
forming the foundation for the pavement.

When the subgrade is formed using a material which is stronger than the upper 500 mm of
embankment soil or when the subgrade itself is prepared in two separate layers with
significantly different strengths, the effective combined contribution of the subgrade and
the embankment layers has to be considered for design. (for low volume roads, top 300mm
is considered for the subgrade).

The soil below 500mm for high volume roads or 300mm for low volume roads is treated as
fill/embankment in road construction.

(2) - Is the subgrade just the natural soil compacted?

No,it is not just the natural soil compacted for subgrade but it is more than that.

For Flexible Pavement- Subgrade CBR is of utmost as per IRC 37:2018, the minimum value
of Subgrade CBR is 5%. During design of flexible pavement resilient modulus of subgrade is
required which is most important factor for the thickness of flexible pavement and there is
also performance criteria for subgrade rutting to calculate rutting life.

For Rigid Pavement- Modulus of subgrade reaction of soil is important as per IRC 58:2015
which is used for the design purpose. If it is very low then for given traffic conditions it
requires more thickness of slab which leads to uneconomy of construction cost that's why it
is not natural soil compacted for subgrade but it is more than that.

Other properties of soil are also required and must have range value for subgrade purpose
for flexible and rigid pavement which is as per MoRTH criteria.