From version 1.0pre4 on tinc will store the public key directly into the host configuration file in PEM format, the above two options then are not necessary. Either the PEM format is used, or exactly one of the above two options must be specified in each host configuration file, if you want to be able to establish a connection with that host.
Subnets can either be single MAC, IPv4 or IPv6 addresses, in which case a subnet consisting of only that single address is assumed, or they can be a IPv4 or IPv6 network address with a prefixlength. For example, IPv4 subnets must be in a form like 192.168.1.0/24, where 192.168.1.0 is the network address and 24 is the number of bits set in the netmask. Note that subnets like 192.168.1.1/24 are invalid! Read a networking HOWTO/FAQ/guide if you don't understand this. IPv6 subnets are notated like fec0:0:0:1::/64. MAC addresses are notated like 0:1a:2b:3c:4d:5e.
Prefixlength is the number of bits set to 1 in the netmask part; for example: netmask 255.255.255.0 would become /24, 255.255.252.0 becomes /22. This conforms to standard CIDR notation as described in RFC1519
A Subnet can be given a weight to indicate its priority over identical Subnets owned by different nodes. The default weight is 10. Lower values indicate higher priority. Packets will be sent to the node with the highest priority, unless that node is not reachable, in which case the node with the next highest priority will be tried, and so on.