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Even though <percentage> may seem like a natural fit (and even suggested by the OT variable font spec), it excludes the use of calc() to dynamically calculate a value along the wdth axis.
There have been several attempts at using a condensed typeface at narrow viewports (most notably on A List Apart). It is plausible that web developers will want to dynamically calculate a value for font-stretch, so <number> seems more appropriate to me (though as a work around, the lower level font-variation-settings could also be used).