Indentations with block embeds

I am playing around with block embeds, and I am seeing something strange.
When viewing a block hierarchy after embedding it, the indentation is all weird. Is this a bug, or something I have done wrong?

Not sure what you have done?
If creating an embedded block out of test 1, it should look like this:

Indeed that was what I expected, but any time I create an embedded block it looks like my example above. It used to work, so it is something that has happened lately. Strange!

Hi,
Yes, I also facing the same issue can anyone have some idea so please suggest.

Thanks