Example code related to StackExchange https://salesforce.stackexchange.com/questions/178487/event-propagation-breaks-with-api-v40-fundexplorer-demo-app/179130#179130

testApp.app

<aura:application extends="force:slds">
	<aura:attribute name="listData" type="String[]" default="['First', 'Second', 'Third']" />
  <!-- HERE comes what is propoesed by performance best practices: only one click-event listener on the outer list -->
	<ul onclick="{!c.onListClick}">
		<aura:iteration items="{!v.listData}" var="data" indexVar="index">
			<li data-itemindex="{!index}">
				<lightning:icon iconName="utility:chat" size="medium" title="title" />
				Data: {!data}
			</li>
		</aura:iteration>
	</ul>
</aura:application>

testAppController.js

({
	onListClick: function(component, event, helper) {
        if (event.target === event.currentTarget) return;
        //as I only have on event listener I have to step through the containment hierarchy
        //to get the li-node where my data tag lives I am interested to
        var el = event.target;
        while (el && (!el.dataset || !el.dataset.itemindex)) {
            el = el.parentElement;
        }
        if (el) {
            console.log("Clicked item has index " + el.dataset.itemindex);
        }
    }
})

NOTE that with API v39 this code works as expected, with API v40 it only works when clicking the text and does not when clicking the icon