We are not familiar with such a problem related with our live demo. It is working as expected according the applied settings.
Fill free to use my sample project as a reference for the discussion. The hierarchy is shown only to the first level, because MaximumDepth property is set to "0". Thus the grid has only one row hierarchy. You can easily set it to "5" for instance.
In my sample project only the insertion of rows is implemented. The update, delete and etc. are not implemented, as they are not related to the subject.
the Telerik team