A "nested node" can happen when an attribute is applied to a group, and then the group is ungrouped. Nested nodes are more likely if multiple transformations have been applied.
During the UnGroup operation, the software applies each attribute that was applied to the group to each individual object. This information is then stored under a nested node entry in the Object list in the Project window.
Nested nodes may not always cause problems, but in general it is best to avoid them. The information in the nested node may override other changes and interfere with what you are trying to do. See Chapter 4 in the User Guide for more information. The User Guide is located in the Help menu.
There is also a helpful thread on the StrataCafe about nested nodes you may want to read: