"Split mesh into subdomains" under Settings allows to split the mesh into subdomains based on selection of a cylinder or a box. For each subdomain then different material properties can be defined. All selected faces will be lost on this option.
Using a box or a cylinder, elements of the current mesh can be selected and assigned to a new subdomain. Currently it is not possible to join subdomains again directly, but it could be done by selection of a box containing all elements.