Can I use a div inside a list item?

Why is the following code valid when I am using a <div> inside a <li>?

<ul>
    <li class="aschild">
        <div class="nav">Test</div>
    </li>
</ul>

Solution 1:

Yes you can use a div inside a li and it will validate.

<!ELEMENT li %Flow;>
<!ENTITY % Flow "(#PCDATA | %block; | form | %inline; | %misc;)*">
<!ENTITY % block     "p | %heading; | div | %lists; | %blocktext; | fieldset | table">

Solution 2:

Inside a <li> you can have anything you could naturally put inside a <div>. They are no different in this sense.

It should be valid in HTML4, XHTML and HTML5 as well.

This is NOT valid though (so the sources you found about "no divs in lists" could refer to this situation):

<ul>
    <li></li>
    <div></div>
    <li></li>
</ul>

So: Lists (ul, ol) can only have lis as their children. But lis can have anything as their children.

Solution 3:

Because <li> is a block element, not an inline element like <span> or <a>.