it does infact use lists, with css to make them dropdown lists. Alternatively, you can use javascript to do the same exact thing. The basic code of this is:
CODE
<ul id='nav2'>
<li ><a href='http://www.createblog.com/layouts/'>Layouts</a>
<ul>
<li class='top'><a href='http://www.createblog.com/layouts/index.php?layout=myspace-layouts'>Myspace Layouts</a></li>
</ul>
</ul>
CODE
#nav2, #nav2 ul { list-style:none; margin:0px; padding:0px; }
#nav2 a { display:block; width:75px; line-height:40px; }
#nav2 a:link, #nav2 a:visited, #nav2 a:active { color:#B8C9DD; text-decoration:none; }
#nav2 a:hover { color:#D6DEE6; }
#current a:link, #current a:visited, #current a:active { color:#ffffff; }
#current a:hover { color:#eeeeff; }
#nav2 li:hover ul, #nav2 li.over ul { left:0px; top:40px; }
#nav2 li:hover ul#rightdrop, #nav2 li.over ul#rightdrop { left:-61px; top:40px; }
#nav2 li { position:relative; float:left; display:block; width:75px; text-align:center; border-right:1px solid #32547b; background-color:#476588; font-family:Arial; font-size:12px; font-weight:bold; }
#nav2 li#current { background-color:#5a7594; }
#nav2 li#search { background-color:#5a7594; width:161px; height:40px; }
#nav2 li#search input { padding:1px; vertical-align:middle; margin-top:9px; }
#nav2 li.submit { background-color:#5a7594; border:0px; width:76px; }
#nav2 li ul { position:absolute; width:75px; left:-999em; }
#nav2 li ul li { font-family:Verdana; width:125px; text-transform:none; text-align:left; font-weight:normal; font-size:9px; background-color:#5a7594; padding:0px 6px; border:0px; border-bottom:1px solid #32547b; }
#nav2 li ul li a { width:125px; line-height:24px; }
#nav2 li ul li.top { border-top:1px solid #fff; }
This is the boxed type, u can remove the borders in the css part, and voila, same thing.