Quick update which I’ll add to first post.
They are very helpful for projects.
For instance, academic research or papers with a mix of broader (intro, discussion) and deeper (experiments). All the deeper is most effectively done within the project vault and the broader can be added and linked from a higher level vault. Once the project is completed, the project vault just becomes a sub-folder unless it is ever needed again.
Have an attachment folder for each vault. This keeps all vault specific attachments in a sub-folder which makes it easier to access and manage from the OS file system should that ever be needed. All the attachments and links are accessible from both the nested vault and higher level vaults.
I also noted the reference with the new block links that using ^^ might be slow in massive vaults. Nested vaults would be one way of managing this where only a smaller and specific group of files needed to be searched for potential linking.