From the Eclipse 4.5M5 New and Noteworthy documentation:
The Project Explorer now provides the ability to view the projects in a hierarchical (a.k.a. nested) form. For modular projects, this allows to have your Project Explorer mapping more closely the organization of your modules as they are on the file system. This hierarchical view of projects often makes easier to navigate modular projects.
Hierarchical view of projects can be triggered from the Project Explorer view menu, under the Projects Presentation item.
Then it makes the folders that are at the same location as a project replaced by the project, and the projects that are nested under other projects will not be shown as root elements.
This implementation relies on the Common Navigator Framework.