How to implement sub menu of the current route's children with vue.js and vue router

You don't need to create new router instances, instead watch the $route property and create the sidebar nav menu as it changes. You'll need to pull the child routes from the $router.options.routes. Here's an example:

const router = new VueRouter({
  routes: [{
      name: 'home',
      path: '/',
      component: {
        template: '<div>Home</div>'
      }
    },
    {
      name: 'foo',
      path: '/foo',
      component: {
        template: '<div>Foo<router-view></router-view></div>'
      },
      children: [{
        name: 'foo.baz',
        path: '/baz',
        component: {
          template: '<div>Baz</div>'
        }
      }, {
        name: 'foo.tar',
        path: '/tar',
        component: {
          template: '<div>Tar</div>'
        }
      }]
    },
    {
      name: 'bar',
      path: '/bar',
      component: {
        template: '<div>Bar<router-view></router-view></div>'
      },
      children: [{
        name: 'bar.zim',
        path: '/zim',
        component: {
          template: '<div>Zim</div>'
        }
      }, {
        name: 'bar.zug',
        path: '/zug',
        component: {
          template: '<div>Zug</div>'
        }
      }]
    }
  ]
})

new Vue({
  el: '#app',
  router,
  data() {
    return {
      children: []
    }
  },
  watch: {
    $route: function(current) {
      const route = this.$router.options.routes.find(route => route.path === current.path)

      if (route && Array.isArray(route.children)) {
        this.children = route.children
      } else if (route) {
        this.children = []
      }
    }
  }
})
* {
  margin: 0;
  padding: 0;
}

html,
body,
#app {
  width: 100%;
  height: 100%;
}

#top {
  border: 1px solid black;
}

#top ul {
  display: flex;
  flex-direction: row;
  justify-content: flex-start;
  list-style-type: none;
}

li {
  padding: 1rem;
  text-align: center;
  text-transform: uppercase;
}

li a {
  text-decoration: none;
  font-weight: bold;
  color: black;
}

#sidebar {
  height: 50%;
  width: 100px;
  border: 1px solid black;
}

#content {
  width: 50%;
}

#content,
#content>div {
  display: flex;
  flex-direction: column;
  justify-content: space-around;
  align-items: center;
}
<script src="https://cdnjs.cloudflare.com/ajax/libs/vue/2.5.17/vue.js"></script>
<script src="https://npmcdn.com/vue-router/dist/vue-router.js"></script>
<div id="app">
  <div id="top">
    <ul>
      <li v-for="item in $router.options.routes" :key="item.path" :style="{ 'background-color': $route.name.includes(item.name) ? 'rgba(197,225,165,1)' : 'white' }">
        <router-link :to="item.path">{{ item.name }}</router-link>
      </li>
    </ul>
  </div>
  <div style="display: flex; flex-direction: row; height: 100%; width: 100%;">
    <div id="sidebar">
      <ul>
        <li v-for="item in children" :key="item.path" :style="{ 'background-color': $route.name === item.name ? 'rgba(197,225,165,1)' : 'white' }">
          <router-link :to="item.path">{{ item.name.split('.').pop() }}</router-link>
        </li>
      </ul>
    </div>
    <div id="content">
      <router-view></router-view>
    </div>
  </div>
</div>