If you look at xhtml1-strict.dtd, you'll see
<!ELEMENT li %Flow;>
<!ENTITY % Flow "(#PCDATA | %block; | form | %inline; | %misc;)*">
<!ENTITY % block
"p | %heading; | div | %lists; | %blocktext; | fieldset | table">
Thus div
, p
etc. can be inside li
(according to XHTML 1.0 Strict DTD from w3.org).