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Trait objects cause higher-ranked trait bounds that disrupt nested closures because of limitations on the Rust type system. In Rust, a closure is essentially a struct that implements a certain trait (Fn, FnMut, or FnOnce). When a closure is nested inside another closure, the inner closure's type includes free type parameters that are bound by the outer closure's type.

When a trait object is used to dynamically dispatch a method call, however, the exact type of the trait being implemented is lost, and the type system is unable to infer the free type parameters. This means that the inner closure's type can no longer be expressed in terms of the outer closure's type, leading to a mismatch.

To work around this issue, Rust supports higher-ranked trait bounds, which allow free type parameters to be quantified over the entire function signature rather than just the closure's type. However, this approach can be complex and difficult to implement correctly, and may require explicit type annotations in certain cases.