Since multiline paragraphs have been permitted since 0.4, it should also be the case for list elements. I.e.
* some long list itemshould be rendered like
* some long list itemAn empty line would be used to start a paragraph.
An empty line marks the end of all lists, even deeply nested ones:
* a * b ** c *dis rendered as
<ul> <li>a</li> ;li>b</li> <ul> <li>c</li> </ul> </ul> <ul> <li>d</li> </ul>
In addition, any markup that doesn't belong in a list will end the list. For instance, tables, headings or preformatted blocks are not allowed inside list elements, and thus a markup that starts any of them will cause a list to end. An alternative solution, ignoring the markup when it appears inside a list, would introduce a nasty special case.
As a general rule of thumb, any inline elements are allowed inside list while the block elements (ones that start on their own line) will cause the list to end.