How do you create a nested list? I have tried the four spaces and that doesn’t seem to work.
Are you creating Markdown lists? If so, the indent is maintained if you hit return within a list - so you can use 2 spaces, 4 spaces, tab, whatever fits your needs.
You can also use the indent/outdent actions that ship in the “Editing” action group to shift the current line or blocks of text.
Yes, I am writing in markdown. The indent works, so thanks for that tip. I swear I tried that before and it didn’t work, but it did work this time. I would really like to use the spaces, because that seems easier to type, but that method does not work and I am wondering why?
Just spaces should work. If you have a Markdown list line that starts with whitespace, has a hyphen, asterisk or plus sign, space then some text, it should be identified as a list item, an hitting return should give you a new blank list line with the same indent…as long as you are using of the the Markdown syntaxes.
Make sure you have some text after the * (or whatever), or it’s considered a blank line and hitting return will end the list.
What happens if you type an odd number of spaces by mistake?
It is easy enough to test what happens with different spacing. As one might expect from the Markdown spec and how HTML collapses spacing, only when you get the right number of spaces do you get the right effect.
I’m one of those strange tabs over spaces people myself, so it would always be obvious if I typed too many or not enough tabs 
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As per the previous example, two spaces would not be enough. You need to use four spaces of a tab to initiate an indent.
This matches the indentation specification for Markdown Lists at Daring Fireball.
List items may consist of multiple paragraphs. Each subsequent paragraph in a list item must be indented by either 4 spaces or one tab:
There is the Tab Key Inserts setting for syntaxes that can be set to tab, 2 spaces or 4 spaces in the drop down. Maybe this is where the confusion comes in? The preview is not using this to drive the Markdown conversion to HTML, but that could be why the indentation seems natural to be 2 or 4 spaces?
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(One day in md2pptx I’ll give users the choice of 2- or 4-spaces, or tabs. At the slide level. Because people embed from diverse sources and I think I’ve seen all 3 variants.)
BTW I’m an asterisk lister myself - to avoid ambiguity with Taskpaper tasks. It’s occurred to me, though, that I could turn a bullet into a task a bit more easily if I used dash, like you did. Probably not worth it.
For what it’s worth, if it was important to you, you could make a syntax that only recognized 4 spaces or tab for list completion. List completion definitions are a dynamic part of Syntax definitions.
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My fix for not rendering nested list with 2 spaces indent: change default markdown to html renderer to github style in settings.