Accidentally defining a group containing a group as a group containing a host raises no error (even though there will be a host and a group with the same names).

hosts

[group-a:children]
group-b

# here group-c is actually a host because of the missing :children
[group-b]
group-c

# as a result, host-c is also a host, but doesn't belong to group-b (or group-a)
[group-c]
host-c

[group-b:vars]
group_b_var=group-b

hosts.correct

[group-a:children]
group-b

# now group-c is a group, not a host
[group-b:children]
group-c

# as a result, host-c now correctly belongs to group-b (or group-a)
[group-c]
host-c

[group-b:vars]
group_b_var=group-b

playbook.yml

- hosts: host-c
  connection: local
  gather_facts: False

  tasks:
  - name: print variable
    action: debug msg="{{group_b_var}}"

results.correct

$ ansible-playbook playbook.yml -i hosts.correct

PLAY [host-c] ***************************************************************** 

TASK: [print variable] ******************************************************** 
ok: [host-c] => {
    "msg": "group-b"
}

PLAY RECAP ******************************************************************** 
host-c                     : ok=1    changed=0    unreachable=0    failed=0  

results.incorrect

$ ansible-playbook playbook.yml -i hosts        

PLAY [host-c] ***************************************************************** 

TASK: [print variable] ******************************************************** 
fatal: [host-c] => One or more undefined variables: 'group_b_var' is undefined

FATAL: all hosts have already failed -- aborting

PLAY RECAP ******************************************************************** 
           to retry, use: --limit @/home/will/playbook.retry

host-c                     : ok=0    changed=0    unreachable=1    failed=0