Woah. CSS variables look like compiler flags. There goes the W3C reinventing the wheel when Sass, Less and others have already laid out how to assign variables just fine for years.
I agree, I need to see a use-case for having cascading variables. The fact that they do seems to go against some of the benefits of them in the first place.
A preprocessor cannot possibly implement CSS variables with cascading because it the value is resolved against a live context.
In other words, you can actually change the variable at runtime with rules that target different selectors.
As such, the "variables" are in fact functions.