{#function name=menu level=0#}
   {#foreach $data as $entry#}
    {#if is_array($entry)#}      
{#$entry@key#}
     {#call name=menu data=$entry level=$level+1#}
    {#else#}      
{#$entry#}
   {#/if#}
  {#/foreach#}  
{#/function#}

{#* create an array to demonstrate *#}
{#$menu = ['item1','item2','item3' => ['item3-1','item3-2','item3-3' =>
['item3-3-1','item3-3-2']],'item4']#}

{#* run the array through the function *#}
{#call name=menu data=$menu#}
{#* call menu data=$menu *#} {#* short-hand *#}

<ul class="level0">
    <li>item1</li>
    <li>item2</li>
    <li>item3</li>
<ul class="level1">
    <li>item3-1</li>
    <li>item3-2</li>
    <li>item3-3</li>
<ul class="level2">
    <li>item3-3-1</li>
    <li>item3-3-2</li>
</ul>
</ul>
    <li>item4</li>
</ul>