The problem there is that some properties are inherited by their children. A lot of formatting is like that. If you have
<p>Some text here</p>
the text in the <p> will be red (unless it's overridden by CSS unseen), even though there is nothing in the CSS that says paragraphs have red text.
A better way to demonstrate it would be to use
font-size:2em;. If you include the > you should see that all the list items are double the size of regular text. But if you leave the > out, the 'not chosen' items will be quadruple the size of normal text (because they are doubled and doubled again as they are contained within two <li>s).