I have a site mapped to http://localhost/ and then tried to see what would happen when I try to create a second site with the same domain but a suffix, for instance http://localhost/test/. The warning error message I get is
It probably validates directory first since you cannot mix different virtual directorys like "/" and "/test/" in the same installation.
Yup, the validation is correct. Just the message that seems to be connected to another validation rule which makes it a bit confusing.