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HTML

<script src="http://code.angularjs.org/1.2.0-rc.2/angular.min.js"></script>
<div ng-app="myapp">
    <div ng-controller="TreeCtrl">
        <tree family="treeFamily"> 
                <!--HTML to be transcluded-->
                <p>{{ family.name }}</p>
        </tree>
    </div>
</div>

CSS

tree {
    margin-left: 20px;
    display: block;
}

JavaScript

var module = angular.module('myapp', []);

module.controller("TreeCtrl", function($scope) {
    $scope.treeFamily = {
        name : "Parent",
        children: [{
            name : "Child1",
            children: [{
                name : "Grandchild1",
                children: []
            },{
                name : "Grandchild2",
                children: []
            },{
                name : "Grandchild3",
                children: []
            }]
        }, {
            name: "Child2",
            children: []
        }]
    };
});

module.directive("tree", function($compile) {
    //Here is the Directive Definition Object being returned 
    //which is one of the two options for creating a custom directive
    //http://docs.angularjs.org/guide/directive
    return {
        restrict: "E",
        //We are stating here the HTML in the element the directive is applied to is going to be given to
        //the template with a ng-transclude directive to be compiled when processing the directive
        transclude: true,
        scope: {family: '='},
        template:       
            '<ul>' + 
                //Here we have one of the ng-transclude directives that will be give the HTML in the 
                //element the directive is applied to
                '<li ng-transclude></li>' +
                '<li ng-repeat="child in family.children">' +
                    //Here is another ng-transclude directive which will be given the same transclude HTML as
                    //above instance
                    //Notice that there is also another directive, 'tree', which is same type of directive this 
                    //template belongs to.  So the directive in the template will handle the ng-transclude 
                    //applied to the div as the transclude for the recursive compile call to the tree 
                    //directive.  The recursion will end when the ng-repeat above has no children to 
                    //walkthrough. ...