Nesting means starting a byobu session within a byobu session. (Yo, dawg)
On one system that does not really make sense.

If you have a session on your local machine and then ssh into another machine just to start a byobu session there, you have a nested session.

If you now press for example Ctrl + a ---> c to open a new window, it will be opened on your local machine.
To send the same command one layer deeper, use Strg + a ---> ac.

This means that every a you are using is pushing your command one nesting layer up.
This is what this looks like on a nesting of three layers.

This way you can have a window for your host, one for each HV (hypervisor) and one for each VM on the HV.