<declaration> is only used in the prelude of @supports:

<supports-in-parens> = ( <supports-condition> ) | <supports-feature> | <general-enclosed>
<supports-feature> = <supports-decl>
<supports-decl> = ( <declaration> )

<supports-decl> should evaluate to true if the UA supports the <declaration> in a style rule.

I would like to clarify if unknown-property: var(--custom) or color: invalid-value match <declaration> or <general-enclosed>.

In #8127, I proposed to define <style-feature> (in the prelude of @container) with <declaration> | <ident> but this seemed to be a problem for some people. It was preferred that <general-enclosed> match the above inputs, to avoid storing an invalid declaration.