Generated by SassMeister.com.

input.scss

// Works in both libsass and dart-sass.
.one {
    content: simple-selectors(&);
}
// Works only in libsass.
// Error in dart-sass: Error: $selector: expected selector.
.one {
    .two {
        content: simple-selectors(&);
    }
}

.one {
    .two {
        .three {
            content: simple-selectors(&);
        }
    }
}

output.css

.one {
  content: .one;
}

.one .two {
  content: .one;
}

.one .two .three {
  content: .one;
}

settings.json

{
  "sass": {
    "compiler": "libsass/3.5.5",
    "extensions": {},
    "syntax": "SCSS",
    "outputStyle": "expanded"
  },
  "autoprefixer": false
}

{
  "sass": {
    "compiler": "dart-sass/1.32.12",
    "extensions": {},
    "syntax": "SCSS",
    "outputStyle": "expanded"
  },
  "autoprefixer": false
}

Gives
Error: $selector: expected selector. on simple-selectors(&)