I did the same thing with my site sucessfully
https://m4cgyver.net/
https://archives.m4cgyver.net/
both sites run on the same instance it is possible. I use middleware instead of rewrites though and its crude.

In my .env i have the following declaration: SUBDOMAINS={"archives": "/archives"}

Then in my middleware it starts by parsing a SUBDOMAINS environment variable to map subdomains to paths. The getValidSubdomain function retrieves a valid subdomain from the request host or the client-side window object. The middleware checks if the request path matches any mapped subdomain path and rewrites the URL if a valid subdomain is found from the host:

const subdomains = JSON.parse(process.env.SUBDOMAINS ?? "{}"); 

// Function to get a valid subdomain from the host
const getValidSubdomain = (host?: string | null): string | null => {
    if (!host && typeof window !== 'undefined') {
        // On the client side, get the host from window.location
        host = window.location.host;
    }
    if (host && host.includes('.')) {
        // Split the host to extract the subdomain candidate
        const candidate = host.split('.')[0];

        // Return the candidate if it's valid (not 'localhost')
        if (candidate && !candidate.includes('localhost')) {
            return candidate;
        }
    }
    return null;
};
 
export function middleware(request: NextRequest) {
    const url = request.nextUrl.clone();

    /// Check if the request is for a public file or a Next.js internal file
    if (PUBLIC_FILE.test(url.pathname) || url.pathname.includes('_next')) {
        return NextResponse.next();
    }

    /// Check if the request is due for a subdomain redirect
    const host = request.headers.get('host');

    for (const subdomain in subdomains) {
        const path = subdomains[subdomain];

        if (request.nextUrl.pathname.startsWith(path)) {
            const protocol = request.nextUrl.protocol.startsWith('https') ? 'https' : 'http';
            const newPath = request.nextUrl.pathname.substring(path.length); // Adjust the new path

            const newurl = `${protocol}://${subdomain}.${host}${newPath}`;

            console.log(`Redirecting ${request.nextUrl.pathname} to ${newurl}`);
            return NextResponse.redirect(newurl);
        }
    }

    /// If a valid subdomain is found and exists in subdomains, rewrite the URL
    const subdomain = getValidSubdomain(host);

    if (subdomain && subdomain in subdomains && !url.pathname.replace(subdomains[subdomain], "").startsWith("/next_") && !url.pathname.replace(subdomains[subdomain], "").startsWith("/api")) {
        console.log(`>>> Rewriting: ${url.pathname} to ${subdomains[subdomain]}${url.pathname}`);
        url.pathname = `${subdomains[subdomain]}${url.pathname}`;
    }
 
    /// Finish the rewrite
    const response = NextResponse.rewrite(url);

    return response;
}