Odds are that the book is referring to static method definitions. All static methods must be defined in a top-level class (or a static nested class, which for most purposes is a top-level class).
Edit: Additionally, static-nested classes can't be defined within regular inner classes. neither can non-final members.
Looks like the only static declaration allowed within an inner class is a final member variable. [ July 11, 2007: Message edited by: Justin Searls ]