Using PhoneApplicationPage as a nested view container

In MVVM Light toolkit for Windows Phone, whenever I am to add a new MvvmLightView (WP) item, I end up with the template creating a PhoneApplicationPage for me.

What about cases, when I want to create a nested view, for example in case of a ListBox ItemTemplate view.

Before MVVM Light, every time I needed a view to separate markup to, I would have created a standard UserControl and that worked fine.

Should I only use MvvmLightView whenever creating a navigable pages?

The item template is a guidance, that produces some code for you. It is not, nor does it intend to be, the single way of creating views or sub views.

In the case you are mentioning, it is usual to create a user control hat is backed on its own view model. This sub-view view model is then included as a property in your main view model. To pass it to your sub-view (e.g. a user control) you bind this property to the user control's DataContext.

<ext:MyUserControl DataContext="{Binding MySubViewProperty}"/>

However, you do not need a separate view model, in some cases it is more appropriate to share the main view model. In this case you do not need to do the above binding, as it is do one implicitly. Also, when you are using the user control within an DataTemplate the templates DataContext is passed to the user control implicitly and you do not need the binding. In general you only need to set the data context when you want to bind to a property of the current context, or to another context.

MVVM is about freedom and MVVM Light about supporting the developer in using this freedom. All guidance are best practises and provide usually the easiest an/or most consistant way, but nothing stops you going down another route for a good reason. Especially the templates are just shortcuts that provide for one problem, but not for the general (meaning every) case.