I learned about these a while back and figure I'll share what I know .....
When you create a drawing and insert "Block 1" for example, it is in the drawing as "Block 1". Cool.
When you take that first drawing and either insert it into another drawing as a block OR Xref it, all the blocks originally in the first drawing become NESTED. When this happens, AutoCAD assigns an arbitrary name to them (often starting with * and featuring names like 'A$23FR4', 'A$HG65S' etc etc.
These are called NESTED blocks. They are a part of your drawing but only because they have been Xreffed or inserted as a part of a bigger block. you can right click it and open the block editor and it will edit like a regular block, but it can't be renamed or deleted (because it's not technically THERE per se).
One of the only solutions I know is to NOT nest blocks UNLESS you're 100% positive that there will be no changes required or unless you are 100% aware that you are nesting them.
Here's another example ...
I create drawing1 and insert block1 as above.
I Xref drawing1 into drawing2. Now block 1 should be be nested and given a name byAutoCAD of 'A$23FR4' (for example). If I insert block1 into drawing2, when bringing up the purge command, you'll notice that (under objects you cannot delete) there should be one "block1" and one 'A$23FR4' block (or something similar).
if I explode the Xref, the 'A$23FR4' should be removed and reverted to its original block1 name.
Nested blocks are AutoCAD's way of differentiating 2 identical blocks in 2 different scenarios or formats.
so in short ... unless you explode the Xref or delete the Xref or block, nested blocks will remain there as part of your drawing UNLESS of course you delete them from the original drawing1
EDITED FOR CORRECTNESS
Where things get murky is that when you delete a block, there appear to be 'leftovers' in the purge menu under the 'blocks' screen. These leftovers are named *D343, *Z32 etc etc. I liken these to breadcrumbs or maybe reference makers from blocks that no longer exist. I normally delete these as they really serve no real purpose once the original block is deleted and purged. I've never had a problem doing that so far.
This is how it works in the block realm anyway ...
Clear as mud, right?


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