The usecase driving fossil's ability to nest the checkout of one repository into the checkout of another was that we (the Tcl Maintainers) wanted to share the same tclconfig/ across many packages instead of maintaining actual copies per package.
A concrete example of this can be found at Tracking Thread Sources with tclconfig nested into a checkout of package Thread.
Generalized the setup looks like shown below, with the package INNER nested into the checkout of OUTER.
# Start with a regular checkout of a project OUTER % mkdir outer % cd outer % fossil open /path/to/outer.fossil # Then add the INNER project # Remember, we are in .../outer here % mkdir inner % cd inner % fossil open --nested /path/to/inner.fossil # Note the --nested option in the last command. This is necessary to make this work.