It is (sadly) possible and known for users to create nested <ref> tags, using {{#tag:ref|foo<ref>bar</ref>}}.
Real-world example:
https://en.wikipedia.org/wiki/Fomitiporia_ellipsoidea
Wikitext fragment:
{{#tag:ref|These sizes are based on the original [[species description|description]] offered by Cui and Dai in 2008.<ref>Cui and Dai 2008</ref> Dai described the [[type specimen]] as "not huge", and a significantly larger specimen has since been found. Dai said that, before the discovery, he and Cui "did not know the fungus [could] grow so huge".<ref name="BBC">Walker 2011</ref>|group=note}}
Output HTML from PHP parser in <references group="note" /> block:
<li id="cite_note-12"><span class="mw-cite-backlink"><b><a href="#cite_ref-12">^</a></b></span> <span class="reference-text">These sizes are based on the original <a href="/wiki/Species_description" title="Species description">description</a> offered by Cui and Dai in 2008.<sup id="cite_ref-10" class="reference"><a href="#cite_note-10"><span>[</span>10<span>]</span></a></sup> Dai described the <a href="/wiki/Type_specimen" title="Type specimen" class="mw-redirect">type specimen</a> as "not huge", and a significantly larger specimen has since been found. Dai said that, before the discovery, he and Cui "did not know the fungus [could] grow so huge".<sup id="cite_ref-BBC_11-0" class="reference"><a href="#cite_note-BBC-11"><span>[</span>11<span>]</span></a></sup></span></li>
Output HTML from Parsoid for above:
<li about="#cite_note-1" id="cite_note-1"><span rel="mw:referencedBy"><a href="#cite_ref-1-0">↑</a></span> <span>These sizes are based on the original <a rel="mw:WikiLink" href="./Species_description" data-parsoid="{"a":{"href":"./Species_description"},"sa":{"href":"species description"},"stx":"piped","dsr":[56,91,22,2]}">description</a> offered by Cui and Dai in 2008.<span about="#mwt161" class="reference" data-mw="{"name":"ref","body":{"html":"Cui and Dai 2008"},"attrs":{}}" id="cite_ref-1-0" rel="dc:references" typeof="mw:Extension/ref" data-parsoid="{"src":"<ref>Cui and Dai 2008","dsr":[123,144,5,0]}"><a href="#cite_note-1">[1]</a></span></span></li>
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Severity: normal