Separation of concerns is better but it depends on identifying the concerns first. Typically I think it's layout vs. styles. You don't want to couple these two, like applying styles that have specific selectors. Styles should be composable, and if the layout has to be flexible then CSS variables are there to help.

Locality is a brute-force way to avoid clashes and ironically they're used in larger codebases when this way of doing things produces a lot of duplicate code. This is how apps get bloated and slow, but large companies love to silo teams thinking it's more efficient but they ignore the performance issues it causes in the long run.