Apple Final Cut Pro 7 - Manual (Page 801)

Important: If you modify a nested sequence duration in a parent sequence, or if you
specifically set In and Out points in a sequence before you nest it into a parent sequence,
the nested sequence may no longer ripple clips in the parent sequence when you adjust
content in the nested sequence.
Editing the Content of One Sequence into Another Without
Nesting It
Instead of nesting one sequence inside another, you can simply edit the clips of a sequence
into another sequence.
Editing Sequence Content Versus Nesting
To help you understand how it works, suppose Sequence A has the following content
edited into it:
Sequence A
If you drag Sequence A into the Canvas to edit it into Sequence B, the resulting nested
sequence typically has one video track and two audio tracks (assuming Sequence A has
two audio output channels).
When nested inside
Sequence B, Sequence A
becomes one clip
in Sequence B.
Sequence B
801 Chapter 49 Sequence-to-Sequence Editing