I'm putting an addition on my home. For a few reasons I won't go into, I don't have the room to put the floor joists & floor on top of the sill plate. Someone suggested a different method which is basically putting the floor "inside" the foundation with the subfloor at the same level as the top of the foundation. I've drawn a picture of what I think this should look like... see it at:
http://home.attbi.com/~meeker49/footer.JPG

A few questions:

1. Is this the correct way to do this? 2. Should the floor joists be resting on the "step"? If so, should I put a "sill plate" on that step? 3. Why does the plywood subfloor need to go out over the foundation? 4. Is a step even necessary?

If this is not correct, or if there's a better way, please let me know. I would appreciate any help... this has me a bit confused. Thanks!