Types of recursion

As a freshman in college I took an intro linguistics class where we spent a lot of time discussing universal grammar and recursive phrase structures. One of the examples we looked at I still don’t fully understand—it illustrated two distinct forms of nested phrases that he mind handles very differently.

1. Nested prepositional phrases

The car in the driveway of the house on the street in NY...

I can make that sentence go on indefinitely, and while a reader (or listener) might get bored or forget parts, it will never feel confusing. It’s just (The car (in the driveway (of the house (on the street (...))))).

2. Nested tense phrases

The mouse the cat the dog the man walked barked at chased ate the cheese.

Yes, it’s grammatical. The mouse ate the cheese. (The mouse the cat chased) ate the cheese. The mouse (the cat the dog barked at) chased ate the cheese. The mouse the cat (the dog the man walked) barked at chased at the cheese.

Personally, I lose track with the introduction of the dog. At first I thought it was just a matter of working memory, but the information content is not that high. I can even turn it back into the first kind of recursion and then suddenly have no difficulty keeping it all in my head: The man walked the dog that barked at the cat that chased the mouse that ate the cheese. It seems to be more a bug in my natural language processing module.

Any suggestions on what might be going on here?