What is a nested sequence and how do you create it?

If you nest a sequence of 5 clips does it become one clip? So how do you make one? I understand that to nest a sequence you highlight the clips you want in the browser and drag them into the viewer. The viewer only shows one of the clips though and the rest are stacked in the recently viewed files. So then what? Am I even doing any of this right?
Sputnik

A nested sequence is a sequence that contains other sequences. It's a way of organizing your work in FCE as your projects become more complex and/or your creative needs necessitate the capabilities nested sequences provide. Nested sequences are very useful for organizing complex projects, to reduce the amount of rendering needed when you are working with effects, and to control the order in which effects are rendered in your project.
Think of it this way - you capture clips from your camera. In FCE you create a sequence and you add your clips to it and then go about doing your editing, adding effects & filters, etc. Your sequence will be listed in the Browser just the same as your captured clips.
If you then create a 2nd sequence, you can put your entire first sequence into it just the same as adding a clip to it (by dragging it from the Browser into your new sequence), and then within the 2nd sequence you can treat the nested sequence as if it were a single clip - set in/out points, add effects & filters, etc.

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