This is the CSS in question:

p, ul, ol, dl, h1, h2, h3, h4, h5, h6, blockquote, pre, form.aui, table.aui, .aui-tabs, .aui-panel, .aui-group {
  margin: 10px 0 0 0;
}

Since it includes the selector for UL, it gets applied to nested ULs in ReST documentation's table of contents (e.g., in README.rst). Note the gap between the top item in the 2nd level UL and its parent list item. Disabling the above rule in developer tools gives good results for the UL in the README (and also breaks the layout elsewhere).