It's briefly mentioned here:
https://kubernetes.io/docs/tasks/inject-data-application/define-command-argument-container/#use-environment-variables-to-define-arguments

But the expansion also works in env definitions.

And it is not mentioned here:
https://kubernetes.io/docs/tasks/inject-data-application/define-environment-variable-container/

There are also a number of details that should be documented in a reference page:
https://github.com/kubernetes/community/blob/master/contributors/design-proposals/node/expansion.md