diff --git a/CHANGELOG.md b/CHANGELOG.md
index f5975115a2..75b94cc39d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -14,10 +14,12 @@ This change log adheres to standards from [Keep a CHANGELOG](https://keepachange
 ### Changed
 * [Docs] [`no-unknown-property`]: fix typo in link ([#3445][] @denkristoffer)
 * [Perf] component detection: improve performance by optimizing getId ([#3451][] @golopot)
+* [Docs] [`no-unstable-nested-components`]: Warn about memoized, nested components ([#3444][] @eps1lon)
 
 [#3451]: https://github.com/jsx-eslint/eslint-plugin-react/pull/3451
 [#3448]: https://github.com/jsx-eslint/eslint-plugin-react/pull/3448
 [#3445]: https://github.com/jsx-eslint/eslint-plugin-react/pull/3445
+[#3444]: https://github.com/jsx-eslint/eslint-plugin-react/pull/3444
 [#3436]: https://github.com/jsx-eslint/eslint-plugin-react/issues/3436
 [#3337]: https://github.com/jsx-eslint/eslint-plugin-react/issues/3337
 [#1591]: https://github.com/jsx-eslint/eslint-plugin-react/pull/1591
diff --git a/docs/rules/no-unstable-nested-components.md b/docs/rules/no-unstable-nested-components.md
index 7e0abc93d4..01e280fd2f 100644
--- a/docs/rules/no-unstable-nested-components.md
+++ b/docs/rules/no-unstable-nested-components.md
@@ -2,9 +2,9 @@
 
 💼 This rule is enabled in the following [configs](https://github.com/jsx-eslint/eslint-plugin-react#shareable-configurations): `all`.
 
-Creating components inside components without memoization leads to unstable components. The nested component and all its children are recreated during each re-render. Given stateful children of the nested component will lose their state on each re-render.
+Creating components inside components (nested components) will cause React to throw away the state of those nested components on each re-render of their parent.
 
-React reconciliation performs element type comparison with [reference equality](https://github.com/facebook/react/blob/v16.13.1/packages/react-reconciler/src/ReactChildFiber.js#L407). The reference to the same element changes on each re-render when defining components inside the render block. This leads to complete recreation of the current node and all its children. As a result the virtual DOM has to do extra unnecessary work and [possible bugs are introduced](https://codepen.io/ariperkkio/pen/vYLodLB).
+React reconciliation performs element type comparison with [reference equality](https://reactjs.org/docs/reconciliation.html#elements-of-different-types). The reference to the same element changes on each re-render when defining components inside the render block. This leads to complete recreation of the current node and all its children. As a result the virtual DOM has to do extra unnecessary work and [possible bugs are introduced](https://codepen.io/ariperkkio/pen/vYLodLB).
 
 ## Rule Details
 
@@ -76,6 +76,20 @@ function Component() {
 
 ```jsx
 function Component() {
+  return <SomeComponent footer={<div />} />;
+}
+```
+
+⚠️ WARNING ⚠️:
+
+Creating nested but memoized components is currently not detected by this rule but should also be avoided.
+If the `useCallback` or `useMemo` hook has no dependency, you can safely move the component definition out of the render function.
+If the hook does have dependencies, you should refactor the code so that you're able to move the component definition out of the render function.
+If you want React to throw away the state of the nested component, use a [`key`](https://reactjs.org/docs/lists-and-keys.html#keys) instead.
+
+```jsx
+function Component() {
+  // No ESLint warning but `MemoizedNestedComponent` should be moved outside of `Component`.
   const MemoizedNestedComponent = React.useCallback(() => <div />, []);
 
   return (
@@ -86,14 +100,6 @@ function Component() {
 }
 ```
 
-```jsx
-function Component() {
-  return (
-    <SomeComponent footer={<div />} />
-  )
-}
-```
-
 By default component creation is allowed inside component props only if prop name starts with `render`. See `allowAsProps` option for disabling this limitation completely.
 
 ```jsx
diff --git a/tests/lib/rules/no-unstable-nested-components.js b/tests/lib/rules/no-unstable-nested-components.js
index fd383fb8b5..a27444ebfd 100644
--- a/tests/lib/rules/no-unstable-nested-components.js
+++ b/tests/lib/rules/no-unstable-nested-components.js
@@ -78,6 +78,7 @@ ruleTester.run('no-unstable-nested-components', rule, {
       `,
     },
     {
+      // false-negative.
       code: `
         function ParentComponent() {
           const MemoizedNestedComponent = React.useCallback(() => <div />, []);
@@ -91,6 +92,7 @@ ruleTester.run('no-unstable-nested-components', rule, {
       `,
     },
     {
+      // false-negative.
       code: `
         function ParentComponent() {
           const MemoizedNestedComponent = React.useCallback(
@@ -107,6 +109,7 @@ ruleTester.run('no-unstable-nested-components', rule, {
       `,
     },
     {
+      // false-negative.
       code: `
         function ParentComponent() {
           const MemoizedNestedFunctionComponent = React.useCallback(
@@ -125,6 +128,7 @@ ruleTester.run('no-unstable-nested-components', rule, {
       `,
     },
     {
+      // false-negative.
       code: `
         function ParentComponent() {
           const MemoizedNestedFunctionComponent = React.useCallback(