The structure evolution in the CeO2-Sm2O3 system is revisited by combining high resolution synchrotron powder diffraction with pair distribution function (PDF) to inquire about local, mesoscopic, and average structure. The CeO2 fluorite structure undergoes two phase transformations by Sm doping, first to a cubic (C-type) and then to a monoclinic (B-type) phase. Whereas the C to B-phase separation occurs completely and on a long-range scale, no miscibility gap is detected between fluorite and C-type phases. The transformation rather occurs by growth of C-type nanodomains embedded in the fluorite matrix, without any long-range phase separation. A side effect of this mechanism is the ordering of the oxygen vacancies, which is detrimental for the application of doped ceria as an electrolyte in fuel cells. The results are discussed in the framework of other Y and Gd dopants, and the relationship between nanostructuring and the above equilibria is also investigated.