I am trying to create a properly nested list using the following code (following Sphinx and docutils docs):
1. X
a. U
b. V
c. W
2. Y
3. Z
Make sure the nested list is indented to the same level as the text of the parent list (or three characters, whichever is greater), like this:
1. X
a. U
b. V
c. W
2. Y
3. Z
Then you'll get the output you expected.
If you want Sphinx to take care of the numbering for you, do this.
#. X
#. Y
#. u
#. v
#. Z