diff --git a/pydantic/main.py b/pydantic/main.py
--- a/pydantic/main.py
+++ b/pydantic/main.py
@@ -717,11 +717,12 @@ def __get_validators__(cls) -> 'CallableGenerator':
 
     @classmethod
     def validate(cls: Type['Model'], value: Any) -> 'Model':
+        if isinstance(value, cls):
+            return value.copy() if cls.__config__.copy_on_model_validation else value
+
         value = cls._enforce_dict_if_root(value)
         if isinstance(value, dict):
             return cls(**value)
-        elif isinstance(value, cls):
-            return value.copy() if cls.__config__.copy_on_model_validation else value
         elif cls.__config__.orm_mode:
             return cls.from_orm(value)
         else:

diff --git a/tests/test_main.py b/tests/test_main.py
--- a/tests/test_main.py
+++ b/tests/test_main.py
@@ -1137,6 +1137,17 @@ class MyModel(BaseModel):
     assert m.__root__ == ['a']
 
 
+def test_root_nested():
+    class MyList(BaseModel):
+        __root__: List[str]
+
+    class MyModel(BaseModel):
+        my_list: MyList
+
+    my_list = MyList(__root__=['pika'])
+    assert MyModel(my_list=my_list).dict() == {'my_list': ['pika']}
+
+
 def test_encode_nested_root():
     house_dict = {'pets': ['dog', 'cats']}
 

Missing downwards compatibility and bug with custom root types
```py
from typing import Generic
from typing import TypeVar
from typing import List
from pydantic.generics import GenericModel
from pydantic import BaseModel

T = TypeVar("T")
class BaseList(GenericModel, Generic[T]):
     __root__: List[T]

class Test(BaseModel):
     mylist: BaseList[int]

Test(mylist=[1,2,3,4])
# Test(mylist=BaseList[int](__root__=[1, 2, 3, 4]))

Test(mylist=BaseList[int](__root__=[1,2,3,4]))
# ---------------------------------------------------------------------------
# ValidationError                           Traceback (most recent call last)
# <ipython-input-10-c373af038c5b> in <module>
# ----> 1 Test(mylist=BaseList[int](__root__=[1,2,3,4]))
# 
# /usr/local/lib/python3.8/dist-packages/pydantic/main.cpython-38-x86_64-linux-gnu.so in pydantic.main.BaseModel.__init__()
# 
# ValidationError: 1 validation error for Test
# mylist -> __root__
#   value is not a valid list (type=type_error.list)
```

Certainly no error with pydantic 1.6.1 (I tested this locally).
Probably also no errors with versions <1.8 because we have automatic tests in place with the newest package versions and these tests only fired yesterday.

On a first glance the documentation does not seem to have changed - so I assume also the behaviour should not have changed with the 1.8 release. See https://pydantic-docs.helpmanual.io/usage/models/#generic-models and 
https://pydantic-docs.helpmanual.io/usage/models/#custom-root-types

Output of `python -c "import pydantic.utils; print(pydantic.utils.version_info())"`:
```
             pydantic version: 1.8
            pydantic compiled: True
                 install path: /usr/local/lib/python3.8/dist-packages/pydantic
               python version: 3.8.0 (default, Oct 28 2019, 16:14:01)  [GCC 8.3.0]
                     platform: Linux-5.4.0-62-generic-x86_64-with-glibc2.27
     optional deps. installed: ['devtools', 'email-validator', 'typing-extensions']
...
```

tests/test_main.py::test_root_nested
tests/test_main.py::test_success tests/test_main.py::test_ultra_simple_missing tests/test_main.py::test_ultra_simple_failed tests/test_main.py::test_ultra_simple_repr tests/test_main.py::test_default_factory_field tests/test_main.py::test_default_factory_no_type_field tests/test_main.py::test_comparing tests/test_main.py::test_nullable_strings_success tests/test_main.py::test_nullable_strings_fails tests/test_main.py::test_recursion tests/test_main.py::test_recursion_fails tests/test_main.py::test_not_required tests/test_main.py::test_infer_type tests/test_main.py::test_allow_extra tests/test_main.py::test_forbidden_extra_success tests/test_main.py::test_forbidden_extra_fails tests/test_main.py::test_disallow_mutation tests/test_main.py::test_extra_allowed tests/test_main.py::test_extra_ignored tests/test_main.py::test_set_attr tests/test_main.py::test_set_attr_invalid tests/test_main.py::test_any tests/test_main.py::test_alias tests/test_main.py::test_population_by_field_name tests/test_main.py::test_field_order tests/test_main.py::test_required tests/test_main.py::test_mutability tests/test_main.py::test_immutability[False-False] tests/test_main.py::test_immutability[False-True] tests/test_main.py::test_immutability[True-True] tests/test_main.py::test_not_frozen_are_not_hashable tests/test_main.py::test_with_declared_hash tests/test_main.py::test_frozen_with_hashable_fields_are_hashable tests/test_main.py::test_frozen_with_unhashable_fields_are_not_hashable tests/test_main.py::test_hash_function_give_different_result_for_different_object tests/test_main.py::test_const_validates tests/test_main.py::test_const_uses_default tests/test_main.py::test_const_validates_after_type_validators tests/test_main.py::test_const_with_wrong_value tests/test_main.py::test_const_with_validator tests/test_main.py::test_const_list tests/test_main.py::test_const_list_with_wrong_value tests/test_main.py::test_const_validation_json_serializable tests/test_main.py::test_validating_assignment_pass tests/test_main.py::test_validating_assignment_fail tests/test_main.py::test_validating_assignment_pre_root_validator_fail tests/test_main.py::test_validating_assignment_post_root_validator_fail tests/test_main.py::test_root_validator_many_values_change tests/test_main.py::test_enum_values tests/test_main.py::test_literal_enum_values tests/test_main.py::test_enum_raw tests/test_main.py::test_set_tuple_values tests/test_main.py::test_default_copy tests/test_main.py::test_arbitrary_type_allowed_validation_success tests/test_main.py::test_arbitrary_type_allowed_validation_fails tests/test_main.py::test_arbitrary_types_not_allowed tests/test_main.py::test_type_type_validation_success tests/test_main.py::test_type_type_subclass_validation_success tests/test_main.py::test_type_type_validation_fails_for_instance tests/test_main.py::test_type_type_validation_fails_for_basic_type tests/test_main.py::test_bare_type_type_validation_success tests/test_main.py::test_bare_type_type_validation_fails tests/test_main.py::test_annotation_field_name_shadows_attribute tests/test_main.py::test_value_field_name_shadows_attribute tests/test_main.py::test_class_var tests/test_main.py::test_fields_set tests/test_main.py::test_exclude_unset_dict tests/test_main.py::test_exclude_unset_recursive tests/test_main.py::test_dict_exclude_unset_populated_by_alias tests/test_main.py::test_dict_exclude_unset_populated_by_alias_with_extra tests/test_main.py::test_exclude_defaults tests/test_main.py::test_dir_fields tests/test_main.py::test_dict_with_extra_keys tests/test_main.py::test_root tests/test_main.py::test_root_list tests/test_main.py::test_encode_nested_root tests/test_main.py::test_root_failed tests/test_main.py::test_root_undefined_failed tests/test_main.py::test_parse_root_as_mapping tests/test_main.py::test_parse_obj_non_mapping_root tests/test_main.py::test_parse_obj_nested_root tests/test_main.py::test_untouched_types tests/test_main.py::test_custom_types_fail_without_keep_untouched tests/test_main.py::test_model_iteration tests/test_main.py::test_model_export_nested_list tests/test_main.py::test_model_export_dict_exclusion tests/test_main.py::test_custom_init_subclass_params tests/test_main.py::test_update_forward_refs_does_not_modify_module_dict tests/test_main.py::test_two_defaults tests/test_main.py::test_default_factory tests/test_main.py::test_default_factory_called_once tests/test_main.py::test_default_factory_called_once_2 tests/test_main.py::test_default_factory_validate_children tests/test_main.py::test_default_factory_parse tests/test_main.py::test_none_min_max_items tests/test_main.py::test_reuse_same_field tests/test_main.py::test_base_config_type_hinting tests/test_main.py::test_allow_mutation_field tests/test_main.py::test_inherited_model_field_copy tests/test_main.py::test_inherited_model_field_untouched tests/test_main.py::test_mapping_retains_type_subclass tests/test_main.py::test_mapping_retains_type_defaultdict tests/test_main.py::test_mapping_retains_type_fallback_error tests/test_main.py::test_typing_coercion_dict tests/test_main.py::test_typing_coercion_defaultdict tests/test_main.py::test_class_kwargs_config tests/test_main.py::test_class_kwargs_config_and_attr_conflict