The $context variable is scoped to the loop, so it's unable to pass a value in the .grid__col rule. Which flag will allow you to use the $context variable anywhere.

// Column loop
@for $i from 1 through $cols {
  $context: context($w, $cols, $gutter);
  $target: ($w * $i) + ($gutter * ($i - 1));
  .grid__col--#{$i} {
    width: percentage($target/$context);
  }
}
.grid__col {
  margin-left: percentage($gutter/$context);
}