When I first read your post I thought it was a daft question for two reasons:
1) It obviously won't compile.
2) It is so short a code, why not simply try it and find out.
However, I did try it and was very suprised to find that
a)It does compile.
b)It gives exactly the same result as your first example.
So your question is valid, although maybe phrased differently, not what happens if? but why?
Try this 'slightly' modified code to see for yourself:
for i=1 to 3
for t=10 to 12
print i
print t
wait 1000
next i
next t
wait key
[EDIT] uwdesign explains all whilst I am typing.