What problem does this address?

This is a tracking issue for several changes needed to fully support Terms Query block inheritance.

This example from the original issue #49094 shows an example usage of a hierarchical term structure where "Water" is the parent term and each item in the list under it is a child of Water. Right now a user would have to add custom CSS to accomplish something similar, and would potentially have to hide children of children as well.

What is your proposed solution?

Tracking progress towards full nesting & inheritance features:

• Use a single WP_Term_Query and remove nested structure from render - changed in Terms Query: simplify controls and layout #72121
• Inherit the parent term from a taxonomy archive - added in Terms Query inspector controls revamp + add subterms option #71633 and modified in Terms Query: simplify controls and layout #72121
• Inherit the parent term from block context - in progress Update Terms Query block to inherit from block context #72187
• Inherit terms from the current post - in progress Update Terms Query block to inherit from post context #72306