First suggestion is just so the two links aren't next to each other without content between them (cognitive: clearer that they are separate links)
second suggestion is to kind of indicate that a non-existent custom prop won't invalidate the function.

Sounds reasonable. I used it with a couple of tweaks:

In this case, we are setting a different {{cssxref("linear-gradient()")}} as the {{cssxref("background-image")}} on {{htmlelement("div")}} elements, depending on whether a --scheme custom property is set to ice or fire. If --scheme doesn't exist, or it exists and is set to any other value, the else value comes into play, and the background-image property is set to none.

Mostly used, with a couple of tweaks:

If a single <if-condition> or <value> is invalid, it does not invalidate the entire if() function; instead, the parser moves on to the next <if-condition> : <value> pair. If no <if-condition> nor <value> is valid, the function returns {{glossary("guaranteed_invalid_value", "guaranteed-invalid")}}.

If you don't go with this edit, we should still get rid of "the" unless you add "keyword"
should "later" be "latter"?

I just removed the "the". I think it sounds better and more definite with "always" included. "latter" is not quite right because I want to include all of the values after the else : <value> pair; I think "latter" implies just the ones at the end.

I thought about it a bit, and went with "the conditions that follow it":

If you include an else : <value> pair before any <if-test> : <value> pairs, the conditions that follow it are not evaluated because else always evaluates to true. The following if() therefore always returns none, and the two <if-test> : <value> pairs are never evaluated:

WDYT?

I played with this a bit, and ended up with:

Debugging a value that is not behaving as expected is one case where you might want to put an else : <value> in a position other than the end of the value list. In the following example, we are trying to work out whether the first <if-test> : <value> pair is working properly. If it isn't, the else : <value> pair returns a value of url("debug.png") to display an image indicating that the first <if-test> : <value> pair needs fixing. The last two <if-test> : <value> pairs are again never evaluated.

This was mostly good; I tightened it up a bit to:

Because an if() function can take the place of whole property values or individual components, it is possible to nest if() functions within other if() functions, and inside other functions such as {{cssxref("calc()")}}.

is the nolint so ipsum isn't spell-checked?

I think it was just because prettier made the code layout a bit weird.