drjones said:
Encounter starts and ends when the DM says so.
This is what I'm inclined to go with. Sometimes, eventhough the players may not actually have had time to stop and rest, they might be starting a new encounter. Take this example:
Party defeats a band of ruffians, but the last two are running away. They don't have time to stop and rest, they have to chase them down. They chase them through some woods, attempt a dangerous climb where they have to avoid some crawlers, walk a narrow bridge one at a time while a strong wind swings the bridge dangerously, and come to a cave entrance where the two ruffians have met up with the remaining members of their band and setup and ambush.
If the DM wants to, he can call this 4 encounters, first where they defeat the original group, second where they have to climb some rocks, third where they have to cross the bridge, and fourth ambush at the cave entrance. While there was no rest time, these are four distinct encounters. Or if the DM deems these are "easy" encounters and shouldn't tax the party too much, they could be considered one big encounter. In either case, the DM may also decide to define this complex encounter to be one milestone, or break it into two milestones. It's all rather flexible really, and ultimately up to the DM.