Medical schools like to fight about things with each other. Subject-based teaching vs. systems-based teaching, M.D. vs. D.O. programs, affirmative action vs. racism, etc. The more things that medical schools can argue about, the more types of medical schools there can be. Mostly this allows medical schools to jack up the price of tuition, but rarely, these factors are important to some applicants when deciding on a school.
The distinction between "subject-based teaching" and "systems-based teaching" is confusing to many applicants because the two terms are never properly explained at any point in the application process. "Things not being explained properly" is a recurring theme in medical school and beyond, so those of you planning on going into medicine should be prepared for a lot of it. "Subject-based teaching" and "systems-based teaching" are simply two different ways that medical schools can decide how they want to teach the material. Based on this decision, they then divide up their curriculum accordingly. They like to give these divisions fancy names like "sequences" or "modules", which is done for the sole purpose of making your life a little more confusing. This is another recurring theme in medicine.
Subject-based teaching means that the sequences are based on broad subjects such as anatomy, biochemistry, physiology, and ethics. There is less potential for integration between the different subjects in this form of teaching, so it's good for those of you who survive school by cramming, information-dumping on tests, and then immediately forgetting everything.
Systems-based teaching means that the sequences are based on body systems, i.e., cardiovascular, pulmonary, neurologic, dermatologic, etc. During each sequence, students learn the anatomy, biochemistry, physiology, etc. that is relevant to that system. Because everything is being taught all at once, this form of teaching could potentially do a great job of integrating the material. In practice however, the topics are never integrated properly because the different lectures are taught haphazardly based on the lecturers' availability. Additionally, professors feel less guilty when they ask really nit-picky questions because they assume that at some point you learned everything about the given system. This is a better system for those of you who have already studied medicine.