I think what is going on is the following. The nonzero section $s$ determines a morphism $\varphi_s : \mathcal{O} \to \mathcal{V}$, while the subbundle $\mathcal{L} \subset \mathcal{V}$ is the image of $\varphi_s$ (see new edit).
The point is that scaling $s$ by $\mathcal{O}^*$ changes the particular morphism $\varphi_s$ but leaves the image of $\varphi_s$ invariant. So the induced map $C \to \mathbb{P}(\mathcal{V})$ only depends on $s$ modulo the action of $\mathcal{O}^*$ and so only sees the image of $\varphi_s$ and not $\varphi_s$ itself.
The local picture over a point is the fact that if I have a vector space $V$ as a bundle over a point $p$, a nonzero section is a choice of vector $0 \neq v \in V$ which determines a morphism $k \to V$ given by $1 \mapsto v$. The induced section of $\mathbb{P}(V)$ is a point corresponding to the line $l \subset V$ spanned by $v$. Multiplying $v$ by some $c \in k^*$ gives the same point in $\mathbb{P}(V)$ and so induces the same line $l \subset V$ by $cv$ corresponds to a different morphism $k \to V$ with image $l$.
$\textbf{EDIT 2}$ I realized from the comment discussions there was a big gap in my understanding of the difference between locally free sheaf and vector bundle. The map $\varphi_s$ is indeed injective as a map of sheaves so that $\mathcal{O}$ is a subsheaf of $\mathcal{V}$. However, $\varphi_s$ does not induce an embedding of associated bundles whenever $s$ vanishes.
If $s$ vanishes at $p$, this means that $s_p \in \mathfrak{p}$ in the local ring $\mathcal{O}_{p}$ and so even though the map on stalks is injective, the map on fibers of the associated line bundle is not.
A characterization of $\mathcal{L}$ that agrees with the construction in your answer is that $\varphi_s$ factors as $\mathcal{O} \to \mathcal{L} \subset \mathcal{V}$ AND where the inclusion $\mathcal{L} \subset \mathcal{V}$ is not just an injective map of locally free sheaves but also induces an embedding of associated vector bundles.
Another algebraic way to construct $\mathcal{L}$ is to look at $Z(s)$. Since $s$ is not identically zero and $C$ is a curve, then $Z(s)$ is a divisor and $\mathcal{L}$ is its associated line bundle. From this point of view, the fact that $C$ is a curve comes up because in higher dimensions, $Z(s)$ will have higher codimension. I'm pretty sure this is just a rephrasing of what you said in your answer though.