They never really worked, and Windows Installer experts used to advise against using them, including the Windows Installer team at Microsoft themselves (see Rule 20: Avoid Nested Installs). Finally, Nested Install custom actions are now officiall deprecated.
Documentation about nested install custom actions has been pulled from the Windows SDK:
Summary List of All Custom Action Types
Instead you can now find this information in SDK topic Concurrent Installations:
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Nested Install Custom Actions are deprecated
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Posted 01 August 2006 - 17:12
|Concurrent Installations, also called Nested Installations, is a deprecated feature of the Windows Installer. Applications installed with concurrent installations can eventually fail because they are difficult for customers to service correctly. Do not use concurrent installations to install products that are intended to be released to the public.|
The recommended method is to use an executable ("chainer exe") that will run the msi files sequentially.