Agreed, and it is indeed possible to have "context coloring" with normal, useful syntax highlighting alongside it - subtly lighten or darken the background color when going down a scope level into a nested function etc.
(For instance, in JS I've come to prefer to un-nest structures as much as possible and the provided example hit some of my code smell receptors that I would refactor it and un-nest most of it, but that's my aesthetic preference here.)