The code comment line you referenced from MDN is wrong.

The & is equivalent to :is(the-containing-selector) so the innermost nested selector expands to

.featured :is(:is(.card) h2)

Which means "an h2 element which has an ancestor which has class card and has an ancestor which has class featured". They can be the same ancestor.

.featured :is(:is(.card) h2) {
  color: yellow;
}

<div class="wrapper">
  <article class="card">
    <h2>Card 1</h2>
    <p>Lorem ipsum dolor, sit amet consectetur adipisicing elit.</p>
  </article>
  <article class="card featured">
    <h2>Card 2</h2>
    <p>Lorem ipsum dolor, sit amet consectetur adipisicing elit.</p>
  </article>
  <article class="card">
    <h2>Card 3</h2>
    <p>Lorem ipsum dolor, sit amet consectetur adipisicing elit.</p>
  </article>
</div>