If your document includes nested ordered or unordered lists (or a mix of the two), it is best to specify a set of ancestor elements that includes both; see §24.5.5 Specifying alternate ancestries for the same element. For example:
[DITAElementSets]
$list= ol ul
This particular element set is predefined in the starting configuration file for DITA output. Specifying $list as an ancestor lets you have bullets subordinate to either bulleted or numbered items, and vice-versa:
In your list items you must use <li><p>, not just <li>, because the nested <ul> needs to be inside the <li>, and the smallest enclosing tag always closes at the end of the paragraph (to prevent “pernicious mixed content” wherever possible). This way, the <p> closes, but the <li> stays open for the nested list.
Suppose your document includes a hierarchy of paragraph formats like this:
Body
Bulleted
BulletedSub
BulletedSub
Bulleted
BulletedSub
BulletedSub
BulletedSub
Body
You would specify the following settings for the bulleted items:
[DITAParaTags]
Bulleted = p
BulletedSub = p
[DITAParents]
Bulleted = $text ul li
BulletedSub = $text $list li ul li