Is the essence of the change here that instead of lifting the stabilisers out to the top level they're instead lifted only as far as necessary?

Yes, except "stabilizers." Probably I should have split the "refactor" into a separate commit. The difference is when it sees an Apply that applies to our tree. (My first intuition was to look for a Block, but there is no Block in this case; in fact, introducing a Block is the workaround.)

Edit: before I forget, it recurses for the "enclosing tree" test, which is special-cased for Apply, as described. Probably it would look better as test(tree) && !enclosingTest(enclosingTree) with two methods. I'll try that edit before my lunch break is over.

I pushed the simpler diff. It's obvious now that the change is when testing the enclosing context. My previous attempt was due to late-night coding. I also aligned the arrows. Can't wait for scalafix.

While you're in the area ... this looks related: scala/bug#11609.

Thank you, @som-snytt!