Last modified: 2013-06-21 02:37:26 UTC
This is a particular problem with 'note' sections, and references used as notes; they commonly include citations for their statements, and you end up with markup that looks like <ref> some text here <ref> a citation for that text</ref></ref> The VE is for some reason displaying it as a citation template, "some text here", a second citation template and a random </ref> tag. See note 1 in https://en.wikipedia.org/wiki/Fomitiporia_ellipsoidea for example.
This is because Parsoid doesn't support the "#tag:ref" hack to let you do multi-level references (which were explicitly not allowed because of the insanity this creates :-)). Creating a secondary bug (VE currently assumes you can't have nested references, which is indeed what Parsoid gives us), bug 49555. Once Parsoid supports this, we'll need to check that we correctly handle this from a UX perspective (amongst other things).
This is now "fixed" (but we may want to make it a nicer experience in the future).