As I understand it, the bug is in `org-md-item'. It formats the tag portion of the description with **%s**, and then simply concatenates the content. This is fine when the content is a simple string, but when the content includes line breaks (i.e. when content is itself a list), it doesn't realize that it needs to include a line break between the tag and the content.
ox-html handles this case correctly because ox-html distinguishes between plain list types, using <li> for ordered and unordered lists and <dt> & <dd> for description lists. I think this issue can be fixed by prefixing `contents' with a newline if `tag' is present and `contents' itself contains multiple lines. However, this feels like a hack, and I'd be open to better approaches. -- Rohit
