This little rhyme is a commonplace token for the quality of self reference . A system or thing is self-referential when it contains subparts that imitate the containing part. In our daily awareness self reference is as common as dirt. We see it in music, where a simple phrase is combined with a variation of itself to make a larger phrase, and these are built up to form larger themes, subjects, sections and movements. The second pair of notes reflects the first pair.
Analogous structure appears in the visual and literary arts.
It even appears in inanimate physical process like the growth of frost on a windowpane, where needles sprout subneedles through several hierarchical stages. The large, wet snowflakes of an April storm have an analogous structure. Each big flake is made by the collision of two smaller flakes, each of which was made in the same way. The soot particles of a dirty flame also have such a structure. Wherever we meet one of these many forms of self-reference, its apparently endless complexity captivates and fascinates us.