With XSL, the problem is you cannot change a variable (it's more like a constant that you're setting). So incrementing a counter variable does not work.
A clumsy workaround to get a sequential count (1,2,3,4,...) would be to call position() to get the "abc" tag iteration, and another call to position() to get the nested "def" tag iteration. You would then need to multiply the "abc" iteration with the number of "def" tags it contains. That's why this is a "clumsy" workaround.
Assuming you have two nested "def" tags, the XSL would look as follows:
<xsl:for-each select="abc">
<xsl:variable name="level1Count" select="position() - 1"/>
<xsl:for-each select="def">
<xsl:variable name="level2Count" select="$level1Count * 2 + position()"/>
<xsl:value-of select="$level2Count" />
</xsl:for-each>
</xsl:for-each>