Thanks for letting me know. I’ve corrected the example.
This is intentional. At least for my needs, the required effort and resulting complexity outweighed the benefit. If nested lists are important to you, and you need to generate the TOC after Hugo completely renders the content, you could use tocbot instead. Here’s a working example:
git clone --single-branch -b hugo-forum-topic-39819 https://github.com/jmooring/hugo-testing hugo-forum-topic-39819
cd hugo-forum-topic-39819
hugo server