The sidebar displays a flattened version of the content in the Nav module. The 404 page also uses a different version of the markup from the Nav module.
A key point of Code Modules is that the maintainer of the site can add a new item to the Nav module without worrying about how it needs to be marked up for various sections of the website. The Nav module takes care of the details of delivering markup appropriate for the Navigation bar at the top of each page, the sidebar div list for this page, and the ordered list for the 404 page.