Backlog Groups used to show nested when creating or editing a defect/story. Now they only show in an alphabetized list which makes selecting a backlog group an arduous task when you have a very long list. You should be able to select the parent backlog group, then click the + button expand the list & see the nested items below. This would help keep the alphabetized list more manageable by showing the parents alphabetized and the nested items below could be expanded or collapsed.

I believe it actually used to work this way prior to one of the many revisions. Please correct this.