One assembly (Assem4) contains two instances of the same sub-assembly (Assem3). That sub-assembly contains two sub-assemblies of its own (Assem1 & Assem2).  Assem1 & Assem2 each contain two parts.  Part1 in Assem1 has two configurations (Default & Alt).  The difference between the two instances of Assem3 is only the change of configuration of Part1.

Why can't I assign a different configuration to each instance of Part1 in the top-level assembly?  To achieve the desired assembly (pictured), I had to create Default & Alt configurations in both of the nested sub-assemblies.

That's fine for this example, but it seems unrealistically cumbersome for larger assemblies with more configured parts.

Am I missing something?