Variables applied to component are not applying to instances of component

Hi @Caitlin5, Thanks for reaching out about this and I appreciate you sharing the recording.

I tried to mimic the behavior in the video but could not reproduce the same. You might need to contact our support team to take a closer look at your design file.

In the meantime, I have put together something might assist you. In this video,
“ballA” which variables attached, and “ballAA” which contains an instance of “ballA”. When selecting the “ballAA” instance and changing the mode, there’s no effect. However, if you select the nested layer(ballA), the mode will change.
On the other hand, when variables are attached to the nested instance of “ballB” in “ballBB” component, allows for mode changes when the "ballBB"instance is selected.

I hope this will provide some clarification. You can check this related article from our Help Center here:Modes for variables

If none of the above doesn’t help, I recommend to reach out our support team for investigate:https://help.figma.com/hc/en-us/requests/new
When you contact our support team, please provide the following:

• Use your Figma account’s email address.
• The direct link to the file and amy related library file and please add support-share@figma.com as an Editor to those files (don’t worry, this won’t impact your billing).
• A brief video recording that shows the issue, this time please ensure the entire Figma window is visible, including the Properties and Layers Panel, and that the relevant layers are expanded.

We deeply appreciate your cooperation, as it will assist our support team in conducting further investigations.
If anyone in our community has additional insights, please feel free to share it here.

Thanks,