Story structure
Story within a story
An embedded narrative: a character inside a story becomes the narrator of a second, inner tale, with further layers called nested stories.
A story within a story, also called an embedded narrative, is "a narrative device in which a character within a story" becomes the narrator of a second, inner tale. Stack more layers and the result is what the article calls nested stories. One Thousand and One Nights is the classic, Scheherazade telling tales that themselves contain further narrated tales; Hamlet stages the type in its purest form with its "play within a play"; and Frankenstein wraps Victor's account inside Walton's letters in a layered frame structure.
For the working writer the inner story is a controlled change of voice and register, and a way to deliver history or theme without narrator summary. The material around it is a frame story, and when the inner tale travels as documents the whole book becomes an epistolary novel. Serial writers should log the layers in the story bible: a nested narrator who stops narrating mid-tale reads as an abandoned promise, not a mystery.