From the spec
§9.2.2 Inline-level elements and inline boxes
Inline-level elements are those elements of the source document that do not form new blocks of content; the content is distributed in lines
(e.g., emphasized pieces of text within a paragraph, inline images,
etc.). The following values of the 'display' property make an
element inline-level: 'inline', 'inline-table', and 'inline-block'.
Inline-level elements generate inline-level boxes, which are boxes
that participate in an inline formatting context.
§9.2.1 Block-level elements and block boxes
Block-level elements are those elements of the source document that are formatted visually as blocks (e.g., paragraphs). The following
values of the 'display' property make an element block-level:
'block', 'list-item', and 'table'.
Block-level boxes are boxes that participate in a block formatting context. Each block-level element generates a principal
block-level box that contains descendant boxes and generated content
and is also the box involved in any positioning scheme.
When you mix block-level and inline-level boxes inside a block container box, then anonymous block boxes will be generated:
§9.2.1.1 Anonymous block boxes
In a document like this:
<DIV>
Some text
<P>More text
</DIV>
(and assuming the DIV and the P both have 'display: block'), the DIV
appears to have both inline content and block content. To make it
easier to define the formatting, we assume that there is an anonymous
block box around "Some text".

Diagram showing the three boxes for the example above
Diagram showing the three boxes, of which one is anonymous, for the
example above.
In other words: if a block container box (such as that generated for
the DIV above) has a block-level box inside it (such as the P above),
then we force it to have only block-level boxes inside it.
In your example, it would be something like
