In real life, notebooks do NOT have sub-notebooks, rather they have sections. Other note-taking apps (such as OneNote), implement this also in this way.
I am used to physical notebooks and OneNote having sections rather than sub-notebooks to separate things this way.
My suggestion would be to rename the sub-notebooks to SECTIONS and keep the existing functionality as it is, so my request is only a cosmetic change. In my opinion it makes more sense this way.
I had myself this same reflexion.
The "cosmetic" aspect is important for non techies people (like I suppose you are like me). To have something logical helps in itself to take more easily control of the software. I had a similar analyse with profiles. Profiles : better menu organisation
Of course you can continue infinitely with sub-sub-sub-... but that's not the point.
Sub-sections of sub-sections will be called also sections. How would you call them in a real notebook? It is anyway quite rare to have 2 levels of sub-sections and from the point of view of the program.
The current implementation calls all of them notebooks anyway, which in my opinion does not reflect real-life. I would call all sub-notebooks, regardless of their level, sections.