When I wrote the InDesign Help topic on creating multi-level lists, I wasn't able to go into the detail that I wanted to. Sure, a person can use the steps to figure out how to create multi-level lists, but without concrete examples, it's not exactly easy. So I'm going to walk through the steps of different multi-level numbered lists. First, I'll show how to create a simple outline in InDesign:

To create an outline, you need to define a list and then create a set of paragraph styles that reference that list.

Step 1 - Define a list.
To do this, choose Type > Bulleted & Numbered Lists > Define Lists. Click New, and type the name of the list. If you want numbering to restart when in different stories or documents, deselect one of both options, and click OK. When you define the paragraph styles, you'll reference this list.

Step 2 - Create the first paragraph style.
* In the Paragraph Styles panel, click the Create New Style icon, type the name of the style (such as "Outline Level 1"), and then click the Bullets & Numbering section.
* Choose the list you defined from the List menu, and specify level 1.
* Choose the Numbering Style Format. Traditionally, the first level of outlining uses I. II. III.
* To make sure all the lines in each paragraph are indented, specify a Left Indent amount (such as 3p0) and then specify a negative First Line Indent value (-3p0).

Step 3 - Begin typing the outline.
Type outline text. Make sure that at least one of the paragraphs wraps to the next line so that you can see if the hanging indents work properly. While creating each paragraph style, place the insertion point in the appropriate level and turn on the Preview option.
Step 4 - Create the other paragraph styles.
Follow the same process to create additional paragraph styles. For each style, specify the level number, the format (such as A. B. C. for the second level and 1. 2. 3. for the third level), and increase the Left Indent value.

Step 5 - Apply the paragraph styles to text.
Tip: If you want more control over restarting the outline, such as starting a new outline within the same story, create a new outline style that's identical to the Level 1 style with one exception. For Mode, chose Start At, and then specify 1. Name this style something like "Level 1 Restart."
That's all there is to it. In Part II, I show how to create multi-level numbering such as 1.1, 1.2, 2.1, 2.2, 2.2.1, and so on.

Great tutorial Bob! You're right, this would be helpful to have in Adobe's LiveDocs. I get questions about this all the time.