I have Google for almost 10 hours and it seems a bit unclear.
When I create a "Subscribe" button with my own "notify_url" will PayPal send an IPN to that URL when each recurring payment is made?
Paypal won't store the notify_URL, you need to pass it everytime you send a transaction to paypal for processing. Notify_URL is one of the attributes of the hash; so when paypal receives your transaction hash, it will pick up whatever values you set for each of the attribute and act accordingly. Your understanding is correct!