Only the top level of a multi-level toc will be visible as "tick marks" on the Kindle's progress bar. I do believe the directional pad will still take you to each entry in the ncx file (I'm not 100% on that) but you won't see all the marks for a multi-level toc.
So when you have 3 sections that are further divided into chapters... if you build the ncx as multi-level, you'll only see the 3 marks representing the 3 sections on the progress bar.
There's no reason, however, that you can't create a flat (not nested) ncx file so all the marks will show up (since those "jump points" are the only thing the ncx is really used for).
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