Google can now render labels hierarchically. I've been using a naming convention to get labels to sort the way I want, but this will further declutter my labels list. You have to go to the Google Labs tab in settings to enable it for your account.
Nested Labels is just a cosmetic change that lets you create labels which are displayed hierarchically. If you enable this experiment and create a label like Mailing-Lists/Linux, you'll notice that Linux is displayed as a subfolder of Mailing-Lists. Unfortunately, all the other places that let you interact with labels show the label as Mailing-Lists/Linux