Yes, correct, they're not nested in a sense that following a child auto-follows parent spaces. First, it may not be an expected behaviour (say, I want to follow my town Space, but not my Country space - that would be too much noise). Similar to how when you put a file into a subfolder it can only be found in that subfolder, not in the parent folder. 

You are, however, touching on a very important issue of systems architecture in general - why not attribute associations with a child to parent context? In some cases, it may be useful but rarely happens because it requires recursive queries that can be very resource-intensive and can be exploited in DDOS attacks or may lead to looping problems in incorrect configurations.

It is possible to configure Spaces to have unlimited nesting, auto-following of parents and upstream publishing of content, but it must be done carefully in every configuration case.