Parser test showing the problem and the expected output
Some wikitext constructions depend on whether we are at the start of a line, or not. This is tracked using a flag called lineStart. However, the parser preprocessor loses track of this flag when a nested template is used.
See http://test.wikipedia.org/wiki/Line-start_flag_lost_when_nesting_templates – it uses {{Top-level template}}, which is only a call to {{Subtemplate}}. The parser thinks the list contained in {{Subtemplate}} is not at the line start (even though it is, in fact), so that (according to bug 529 behavior) it prepends a newline, which appears as a redundant paragraph on output.
If {{subtemplate}} is called directly, the paragraph disappears, and the output is correct.
See the attached parser test.
Version: unspecified
Severity: normal
URL: http://test.wikipedia.org/wiki/Line-start_flag_lost_when_nesting_templates
Attached: