When you convert a task to a subtask, it appears that during conversion the new subtask will loose original project association based which project the user is in during conversion. This makes sense if the new parent task is in the same project as the sub-task, but doesn’t make sense if the new parent task is in another project.
Task A in Project A Made Subtask of Task B in Project A from within Project A. Task A Converted to Subtask and Looses Project A association. This makes sense, as you wouldn’t want the new sub-task to be at same level as tasks within Project A.
Task A In Project A Made Subtask of Task B in Project B from within Project A. Task A converted to Subtask and looses Project A association. In this case I don’t think it makes sense, as people in project A would still like to see Task A in their project.
In my opinion, it would make more sense to determine subtask project association based on the new Parent task project association, rather than just what project the user is in when they convert to subtask.
There is a workaround where in scenario 2 above if you convert from project B rather than A then the task will keep project A association, but this is something end users need to remember to do.