Ok, I got it. What you are doing is called nested instancing (instancing on an instance) https://docs.blender.org/manual/en/latest/modeling/geometry_nodes/instances.html#geometry-nodes-nested-instancing the page states:

Warning Only eight levels of nested instancing are supported for rendering and the viewport currently. Though deeper trees of instances can be made inside geometry nodes, they must be realized at the end of the node tree.