Interesting question.
While building our Farm-wide User Manager Application we had to explore all
of these possibilities. Although you can't directly create a managed path
inside of a managed path you can make it appear as if that is exactly what
you have done.
For instance, let's say that you created a top-level site in the root as
follows:
http://WebSite/
No problem, you could then create a top-level sites in a managed path called
Path1 as follows:
http://WebSite/Path1/TopSite1
http://WebSite/Path1/TopSite2
You could also create top-level sites in other managed paths as follows:
http://WebSite/Path2/TopSite1
http://WebSite/Path3/TopSite1
The first challenge is creating top-level sites in a nested managed path
called Path2 as follows:
http://WebSite/Path1/Path2/TopSite1
The interface doesn't provide the ability to create a managed path within a
managed path nor can you create a top-level site as a child of a top-level
site. It appears as if we are stuck. So, I asked one of my kids how they
would do it. They suggested that I create a managed path that included the
slash in the name: "Path1/Path2"
While it is true that Path2 is not a true child of first, you would be hard
pressed to convince an information office worker. Perception is reality.
The second and bigger challenge is creating multiple, named top-level sites
directly in the root as follows:
http://WebSite/TopSite1
You can easily create a child site here or a document library that contains
Web Part Pages and behaves like a web Site, but I don't think that you can
create a named top-level site directly in the root. To quote James Edelen,
"I'd love to be wrong, but I don't think so."