Significance of top-level definition of overloaded functions

GenericOverloadedFunctionTest.swift

protocol ProtocolA {}
protocol ProtocolB {}

func overloadingTest <T where T: ProtocolA>( obj: T ) -> String
{
    return "It's an implementation of Protocol A"
}

func overloadingTest <T where T: ProtocolB>( obj: T ) -> String // This compiles fine, and the appropriate 'topLevelTest' function is bound
{
    return "It's an implementation of Protocol B"
}

func aFunction()
{
    func nestedOverloadingTest <T where T: ProtocolA>( obj: T ) -> String
    {
        return "It's an implementation of Protocol A"
    }
    
    func nestedOverloadingTest <T where T: ProtocolB>( obj: T ) -> String // Fails to compile with 'Definition conflicts with previous value'
    {
        return "It's an implementation of Protocol B"
    }
}

Why can the compiler handle overloaded functions defined at top-level; but not against those inside the scope of another function?

My wild guess is that nested functions become scoped values assigned to a reference to the function, rather than using regular function/method resolution.