Parent Element Backdrop-Filter Does Not Apply for Its Child

nav {
  position: fixed;
  top: 0;
  left: 0;
  right: 0;
  height: 50px;
  background: hsla(0, 0%, 100%, 80%);
  border-bottom: 1px solid hsla(0, 0%, 0%, 10%);
  z-index: 1;
}
nav:before {
  content:"";
  position:absolute;
  z-index:-1;
  -webkit-backdrop-filter: blur(2px);
  backdrop-filter: blur(2px);
  top:0;
  left:0;
  right:0;
  bottom:0;
}
nav ul {
  display: flex;
  align-items: center;
  margin: 0;
  padding: 0;
  list-style: none;
}

nav li {
  position: relative;
  margin: 0 20px;
  height: 50px;
  line-height: 50px;
}

nav li ul {
  position: absolute;
  top: 50px;
  left: 0;
  flex-direction: column;
  align-items: stretch;
  width: 200px;
  background: hsla(0, 0%, 100%, 80%);
  opacity: 0;
  -webkit-backdrop-filter: blur(2px);
  backdrop-filter: blur(2px);
  pointer-events: none;
}

nav li:hover ul {
  opacity: 1;
  pointer-events: all;
}

nav li li {
  margin: 0;
  height: 30px;
  line-height: 30px;
}

<nav>
  <ul>
    <li>Nav 1</li>
    <li>Nav 2</li>
    <li>Nav 3
      <ul>
        <li>Nav 3-1</li>
        <li>Nav 3-2</li>
        <li>Nav 3-3</li>
      </ul>
    </li>
  </ul>
</nav>

<main>

  <h2>What is Lorem Ipsum?</h2>
  <p>Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It
    has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop
    publishing software like Aldus PageMaker including versions of Lorem Ipsum.</p>

  <h2>Why do we use it?</h2>
  <p>It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here,
    content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various
    versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).</p>

  <h2>Where does it come from?</h2>
  <p>Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up
    one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of "de Finibus Bonorum
    et Malorum" (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, "Lorem ipsum dolor sit amet..", comes from a line in section
    1.10.32.</p>
  <p>The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions
    from the 1914 translation by H. Rackham.</p>

  <h2>Where can I get some?</h2>
  <p>There are many variations of passages of Lorem Ipsum available, but the majority have suffered alteration in some form, by injected humour, or randomised words which don't look even slightly believable. If you are going to use a passage of Lorem Ipsum,
    you need to be sure there isn't anything embarrassing hidden in the middle of text. All the Lorem Ipsum generators on the Internet tend to repeat predefined chunks as necessary, making this the first true generator on the Internet. It uses a dictionary
    of over 200 Latin words, combined with a handful of model sentence structures, to generate Lorem Ipsum which looks reasonable. The generated Lorem Ipsum is therefore always free from repetition, injected humour, or non-characteristic words etc.</p>

</main>

CSS 'backdrop-filter' on parent div messes with child div's height and width when using 'position: fixed'

This question has already been asked

https://stackoverflow.com/a/52937920/15859431

This means that your position:fixed element will be positioned relatively to the filtered container and no more the viewport

A value other than none for the filter property results in the
creation of a containing block for absolute and fixed positioned
descendants unless the element it applies to is a document root
element in the current browsing context. The list of functions are
applied in the order provided.

backdrop-filter not working for nested elements in Chrome

Place the backdrop filter on css pseudo element. This allows nested backdrop filters. Also you can use z-index: -1; to position your backdrop behind your elemets

div {
  height: 100px;
  width: 100px;
}
.wrapper {
  position: absolute;
}
.outer, .inner {
  position: relative;
}
.outer::before {
  content: '';
  position: absolute;
  width: 100%;
  height: 100%;
  -webkit-backdrop-filter: blur(8px);
  backdrop-filter: blur(8px);
}
.outer {
  background: rgba(255, 0, 0, .5);
}
.inner::before {
  content: '';
  position: absolute;
  width: 100%;
  height: 100%;
  -webkit-backdrop-filter: blur(8px);
  backdrop-filter: blur(8px);
  
}
.inner {
  background: rgba(0, 0, 255, .5);
  top: 50px;
  left: 50px;
}
main {
  position: relative;
}

<main>
  <div class="wrapper">
    <div class="outer">
      <div class="inner"></div>
    </div>
  </div>

  <p>Lorem ipsum dolor sit amet, consectetur adipisicing elit. Accusamus in id quos, est voluptatibus minus porro sunt totam quod commodi odit maxime similique, dolorum aut quo atque. Deleniti, voluptas animi.</p>
  <p>Lorem ipsum dolor sit amet, consectetur adipisicing elit. Accusamus in id quos, est voluptatibus minus porro sunt totam quod commodi odit maxime similique, dolorum aut quo atque. Deleniti, voluptas animi.</p>
  <p>Lorem ipsum dolor sit amet, consectetur adipisicing elit. Accusamus in id quos, est voluptatibus minus porro sunt totam quod commodi odit maxime similique, dolorum aut quo atque. Deleniti, voluptas animi.</p>
  <p>Lorem ipsum dolor sit amet, consectetur adipisicing elit. Accusamus in id quos, est voluptatibus minus porro sunt totam quod commodi odit maxime similique, dolorum aut quo atque. Deleniti, voluptas animi.</p>
  <p>Lorem ipsum dolor sit amet, consectetur adipisicing elit. Accusamus in id quos, est voluptatibus minus porro sunt totam quod commodi odit maxime similique, dolorum aut quo atque. Deleniti, voluptas animi.</p>
</main>

And here is codepen

Transitioning backdrop-filter: blur on an element with overflow: hidden parent is not working

You probably want the transitioning to happen on the pseudo element and move the opacity of that.

p {
  height: 400px;
}

.container {
  position: relative;
  width: 300px;
  height: 300px;
  border: 1px solid black;
  overflow: hidden;
  z-index: 1;
}

.overlay {
  position: absolute;
  inset: 0;
  z-index: 2;
}

.overlay::after {
  content: "";
  position: absolute;
  inset: 0;
  backdrop-filter: blur(2px);
  opacity: 0;
  transition: opacity 500ms ease;
}

.container:hover .overlay::after {
  opacity: 1;
}

<div class="container">
  <p> Lorem ipsum dolor sit amet </p>
  <div class="overlay"></div>
</div>

.container {
  display: inline-block;
  width: 200px;
  height: 200vh;
  border: 1px solid;
}

.container>div {
  position: fixed;
  width: 100px;
  height: 100px;
  background: red;
  color: #fff;
}

<div class="container">
  <div>I am fixed on scroll</div>
</div>

<div class="container" style="filter:grayscale(1);">
  <div>I move with the scroll</div>
</div>