There is no padding property on a Group mark. Instead, you can access group properties using Field Values. Something like the following should work.
Editor

{
"$schema": "https://vega.github.io/schema/vega/v5.json",
"autosize": "none",
"config": {"group": {"stroke": "black"}},
"signals": [
{"name": "target_height", "value": 400},
{"name": "target_width", "value": 300},
{"name": "level_0_padding", "value": 64},
{"name": "level_1_padding", "update": "1/2 * level_0_padding"},
{"name": "level_2_padding", "update": "1/4 * level_0_padding"},
{"name": "level_0_height", "update": "target_height - 2*level_0_padding"},
{"name": "level_0_width", "update": "target_width - 2*level_0_padding"},
{"name": "level_1_width", "update": "level_0_width - 2*level_1_padding"},
{"name": "level_1_height", "update": "level_0_height - 2*level_1_padding"}
],
"width": {"signal": "level_0_width"},
"height": {"signal": "level_0_height"},
"padding": {"signal": "level_0_padding"},
"marks": [
{
"type": "group",
"signals": [
{
"name": "level_2_width",
"update": "level_1_width - 2*level_2_padding"
},
{
"name": "level_2_height",
"update": "level_1_height - 2*level_2_padding"
}
],
"encode": {
"update": {
"width": {"signal": "level_1_width"},
"height": {"signal": "level_1_height"},
"x": {"signal": "level_0_width-level_1_width - level_1_padding"},
"y": {"signal": "level_0_height-level_1_height - level_1_padding"},
"stroke": {"value": "red"},
"strokeOpacity": {"value": 0.5}
}
},
"marks": [
{
"type": "group",
"encode": {
"update": {
"width": {"signal": "level_2_width"},
"height": {"signal": "level_2_height"},
"x": {
"field": {"group": "width"},
"mult": 0.5,
"offset": {"signal": "-level_2_width/2"}
},
"y": {
"field": {"group": "height"},
"mult": 0.5,
"offset": {"signal": "-level_2_height/2"}
},
"stroke": {"value": "blue"},
"strokeOpacity": {"value": 0.5}
}
}
}
]
}
]
}