From the Delphi help:

A special difficulty arises in connection with nested if statements. The problem arises because some if statements have else clauses while others do not, but the syntax for the two kinds of statement is otherwise the same. In a series of nested conditionals where there are fewer else clauses than if statements, it may not seem clear which else clauses are bound to which ifs. Consider a statement of the form

if expression1 then if expression2 then statement1 else statement2;

There would appear to be two ways to parse this:

if expression1 then [ if expression2 then statement1 else statement2];
if expression1 then [ if expression2 then statement1] else statement2;

The compiler always parses in the first way. That is, in real code, the statement

if ... { expression1 } then
if ... { expression2 } then
... { statement1 }
else
... { statement2 } ;

is equivalent to

if ... { expression1 } then
begin
if ... { expression2 } then
... { statement1 }
else
... { statement2 }
end;

The rule is that nested conditionals are parsed starting from the innermost conditional, with each else bound to the nearest available if on its left. To force the compiler to read our example in the second way, you would have to write it explicitly as

if ... { expression1 } then
begin
if ... { expression2 } then
... { statement1 }
end
else
... { statement2 } ;