> (defun foo ()
>   "Do foo stuff. Define `bar' if `define-bar-flag' is non-nil."
>   (when define-bar-flag (defun bar () (bar-stuff)))

Using `defun' inside the body of a function is very poor style.
I.e. don't do it.

As for your question: the byte-compiler compiles all the code.


        Stefan
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