Yes, this is supported and is used quite often.  In the example above users will be able to write data to the folders until either the child folder reaches its 500GB quota or the parent folder reaches its 2TB quota, which ever happens first. See the screenshot below for the example I created and tested on SE Lab2 [IMAGE]
I have had a few customers ask me if we support nesting directory quota's such as below;  Hard quota of 2TB on /ifs/data/parent  Hard quota of 500GB on /ifs/data/parent/child1 Hard quota of 500GB on /ifs/data/parent/child2Hard quota of 500GB on /ifs/data/parent/child3 Hard quota of 500GB on /ifs/data/parent/child4Hard quota of 500GB on /ifs/data/parent/child5  Will this work and is it supported?
Nesting Directory Quota's