It nests the loops. Two loops in one event is the same as having one loop and then another loop in a subevent under that.
Ahh, thanks for the clarification — As a side note then, maybe there should be a clause regarding this in the manual. This specific case is a little ambiguous. Going off of how actions and events are written to work in the manual, and understanding how loops work, I interpreted it as both loops running together. It would make more sense conceptually in the visual editor if to have a nested loop one of the loops needed to be added as a subevent.