How to apply nested stacks with stack blocks?

[romainframe]

Question

I'm trying to use nested stack blocks in Terragrunt but getting confused about the proper workflow.

When I have a env stack that references another stack (not units directly), terragrunt stack run apply from the root doesn't seem to work as expected.

Minimal Reproduction

Directory Structure

infra/
infra/prod
infra/prod/terragrunt.stack.hcl # env stack (referencing `mystack`)
infra/stacks/mystack/
infra/stacks/mystack/terragrunt.stack.hcl # application stack (referencing `postgres` unit)
infra/units/postgres/terragrunt.hcl # Unit definition

Env Stack (infra/prod/terragrunt.stack.hcl)

stack "prod" {
  source = "${get_repo_root()}/infra/stacks/mystack"
  path   = "mystack"

  values = {
    environment = "production"
    # ... other values
  }
}

Application Stack (infra/stacks/mystack/terragrunt.stack.hcl)

unit "postgres" {
  source = "${get_repo_root()}/infra/units/postgres"
  path   = "postgres"

  values = {
    # ... values
  }
}

The Issue

When running from the production directory:

cd infra/prod
terragrunt stack run apply

I get: could not find any subfolders with Terragrunt configuration files

Full output

$ terragrunt stack run apply
10:10:22.985 INFO   Generating stack from ./.terragrunt-stack/terragrunt.stack.hcl
10:10:23.020 INFO   Generating stack from ./terragrunt.stack.hcl
10:10:23.020 INFO   Processing unit postgres from ./.terragrunt-stack/terragrunt.stack.hcl
10:10:23.029 INFO   Processing stack mystack from ./terragrunt.stack.hcl
10:10:23.032 ERROR  could not find any subfolders with Terragrunt configuration files
10:10:23.033 ERROR  Unable to determine underlying exit code, so Terragrunt will exit with error code 1

However, terragrunt stack generate works fine and creates the nested structure.

Workaround

The solution that works is navigating to the generated nested stack:

cd infra/prod
terragrunt stack generate
cd .terragrunt-stack/mystack
terragrunt stack run apply

Questions

1. Is this the intended workflow for nested stacks? The documentation shows examples of stack blocks but doesn't clearly explain the apply workflow for hierarchical structures.
2. Should terragrunt stack run apply from the root work with nested stacks? Or is navigating to the nested generated directory the expected pattern?
3. Is there a better way to structure this? Should I avoid nesting stacks and reference units directly instead?

Environment

• Terragrunt:

$ terragrunt -v
terragrunt version 0.84.1

• Tofu:

$ tofu -v
OpenTofu v1.10.5
on darwin_arm64

• OS

$ sw_vers
ProductName:            macOS
ProductVersion:         15.5
BuildVersion:           24F74

Thanks for any guidance on the best practices for nested stack workflows!