How do nested vertical margin collapses work?

I am having a hard time grasping the concept of vertical margins collapsing in nested elements. I came an article at http://www.howtocreate.co.uk/tutorials/css/margincollapsing explaining how it works however am confused by its explanation. So in its example it cites that there are 2 elements as follows

<div style="margin-top:10px">
<div style="margin-top:20px">
A
</div>
</div>  

Seeing that the inner div has a margin of 20px, that is what will be applied for the entire block of code. What confuses me is everything after that and not yet looking about issues with Internet Explorer 7. Would someone be able to explain it for a comp开发者_Go百科lete newbie to CSS in a simplified manner?

Two-ish rules to remember:

1. If margins touch, they collapse.
2. Nested items "snuggle" if only margin separates them.
3. Elements outside the "Flow" behave differently. That is, this behavior does not apply the same to floated, or position:fixed, or position:absolute elements.

So for this HTML (nested divs) :

<div id="outer"> 
    <div id="inner">
        A
    </div>
</div> 

and this initial CSS:

#outer {
    margin-top:10px;
    background:blue;
    height: 100px;
}
#inner {
    margin-top:20px;
    background:red;
    height: 33%;   
    width: 33%;
}

The margin collapses to the max of the touching margins and the nested div "snuggles" to the start of the container, like so: (See it at jsFiddle.)

But, the moment the two margins are separated -- by a border or by preceding content in the container, for example -- the margins no longer touch, so they no longer collapse.

EG, just a little, non-breaking white-space , like so:

<div id="outer">&nbsp;
    <div id="inner">
        A
    </div>
</div>

kills the collapse : (See that at jsFiddle.)

Using a border, instead of leading text : (Fiddle)

A diagram may help:

In case it wasn't obvious: blue = outer div, red = inner div; I've drawn them with constant height and horizontal positioning. You can work out what happens if the height is fitted to the contents etc.

The "Before collapsing" column shows what you get if the margins aren't considered adjacent, e.g. if you draw the border of the blue/outer div; but if there is no border, then you get the "After collapsing" column. The top row switches the two margins around from the example, because I think the behaviour in this case is more intuitive; the bottom one shows the example at howtocreate and is consistent with the top row.

Two-ish rules to remember:

If margins touch, they collapse. Nested items "snuggle" if only margin separates them. Elements outside the "Flow" behave differently. That is, this behavior does not apply the same to floated, or position:fixed, or position:absolute elements.

Brock Adams is correct, but I also wanted to add that "overflow:hidden" can also prevent nested margins from collapsing.