Figure with caption within an itemize list not indenting correctly

Don't use a floating environment (such as figure) if you want your image to appear in the exact position where you write it. You can use a minipage and, if a caption is required, the \captionof command (provided by the capt-of package or by the caption package).

In the following example I illustrate this approach; I also used the `enumitem package to customize the labels for the inner list:

\documentclass{article}
\usepackage[demo]{graphicx}% demo option just for the example
\usepackage{caption}
\usepackage{enumitem}
\begin{document}

\begin{itemize}
    \item Describing large-scale processor activity.
    \item To discuss digital systems of this scale and level of complexity
    we need a number of descriptive tools.
    \item For example:                                                 
    \begin{enumerate}[label=\alph*)]
        \item Circuit schematics highlight the circuit components and
        their connectivity.\par
        \begin{minipage}{\linewidth}
            \centering
            \includegraphics[width=10cm]{assets/fig001.png}
            \captionof{figure}{Transfer from R1 to R2 whenK1=1}
        \end{minipage}
        \item Timing diagrams highlight the detailed time sequence of
        transfer between registers.\par
        \includegraphics[width=10cm]{assets/fig002.png}
    \end{enumerate}
\end{itemize}

\end{document}