This is an archived snapshot of W3C's public bugzilla bug tracker, decommissioned in April 2019. Please see the home page for more details.
I means this: findElement(loc1).findElement(loc2)
So the spec only defines the service provider interface (SPI) to WebDriver and not the API as seen from a client binding language, so the example you use makes no sense because WebElement returned by findElement doesn't hold any session state or control. But you're right that finding elements in the context of another element seems to be missing.
This was fixed in https://github.com/w3c/webdriver/commit/15c9632133105079208b7a75cae7520b92ac8066