I saw this hairstyle in a Spring/Summer American Girl catalog last year so thought that I would make a tutorial on how to do it. This style work best on dolls with medium or long hair; I was able to do it on my mom's JLY #30, Nancy, as well so it should work on most dolls with layered hair (at least the actual braid part).
I've included both photo/text instructions as well as a video tutorial. There are different variations you can try, such as a Braid Within a Braid down the back or a ponytail/pigtails with a Braid Within a Braid. This tutorial shows you how to make one on each side and then tie them back behind your doll's head.
Let me know if you try this style on your dolls. Use #cpbraidwithinabraid to share photos of your dolls wearing this style.