When we say that the Catholic Church "is" Christ's Church, some people think--not entirely unreasonably--that we mean that no element of the Church can be found outside the Church. If so, this would imply that grace itself could not be found outside the Church.
But we know that Protestants, for example, confer valid baptism (which confers grace), and we know that it is possible for a Protestant who falls into sin to repent and to be returned to a life of grace. We also know that "God wills the salvation of all men," and that means he must give "all men" enough grace to be saved, even if throughout life they remain outside the Church.
Thus, something that properly "belongs" to the Catholic Church--grace--is found outside of its formal boundaries.
The technical word "subsists" gets around this difficulty. Granted, it has a difficulty of its own. Some people think it means that the Catholic Church is just a subset of the bigger Church that Christ established. But this is not what the word really means. It means that the fullness of Christ's Church is found only in the Catholic Church, but it also means that certain elements of Christ's Church may be found elsewhere.