Nested dropdowns allow you to have a second dropdown appear once a first dropdown is answered. This is particularly helpful for cases involving responses dependent on a previous answer. (For example, someone's country, state, and city).
First, drag n drop the spacer component from the Components tab into your step:
You'll see the traits appear on the left:
All the changes can be made in the JSON available on the left bottom side of the step. For the Nested drop-down:
The key would be the ID or the Key Identifier,
The list will be the list of options under that key,
The Label is the actual option that the end-user selects, and
The value is the value that is stored in the database.