Blocks in a Simulink® diagram should be grouped together into subsystems based on functional decomposition of the algorithm, or portion thereof, represented in the diagram.
Grouping blocks into subsystems primarily for the purpose of saving space in the diagram should be avoided. Each subsystem in the diagram should represent a unit of functionality required to accomplish the purpose of the model or submodel. Blocks can also be grouped together based on behavioral variants or timing.
If creation of a subsystem is required for readability issues, then a virtual subsystem should be used.