Please consider this

  fossil help branch

  Usage: fossil branch SUBCOMMAND ... ?-R|--repository FILE?

  Run various subcommands on the branches of the open repository or
  of the repository identified by the -R or --repository option.

  (...)

  mkdir branchtest
  cd branchtest
  date > txt
  fossil new repos
  fossil open repos
  fossil add txt
  fossil commit --nosign -m initial
  date >> txt
  fossil branch new test1 -R repos

  fossil: there are uncommitted changes. please commit first

  cd ..
  fossil branch new test1 -R tagtest/repos

  fossil: not within an open checkout

So it seems, that either there is a buglet within branch new or within the help text.

drh added on 2008-07-25 11:52:46:
The "branch" command was added by Jeremy Cowgar about 10 months ago, during a burst of productivity. But since then, we haven't heard anything from Jeremy. I do not know what the "branch" command is intended to do, so I cannot judge whether or not it is working correctly or not. My inclination is simply to delete the command all together. I do not see that it does anything useful.

Please take further discussion of the "branch" command to the mailing list. In general, tickets should be used to report real bugs. Please do not use tickets as a place to ask questions or as a discussion forum.