What is the use of CATKIN_DEPENDS in catkin_package (CMakeLists.txt)?

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B depends on A & C depends on B. B find_package-s, build_depend-s & run_depend-s A. C find_package-s, build_depend-s & run_depend-s B. Installing B gets B's runtime dependencies & find_package-ing B find_package-s A, so C gets A's headers & libraries as well. So B CATKIN_DEPEND-ing A isn't required.

False. In the example that you give, if B provides a header that depends on a header in A, and C uses that header, C will fail to compile if B does not specify a CATKIN_DEPENDS on A. (particularly if building a three packages from source)

C does not get A's headers and libraries included in the B_INCLUDE_DIRS and B_LIBRARIES unless B explicitly lists them in CATKIN_DEPENDS (most times this goes unnoticed if A and B are installed from binaries and their includes are installed in the same directory)

@^ Can you update the answer with this example? This'll be really helpful for others who visit the page.

@ahendrix One more question, dependencies tagged using <build_export_depend> in package.xml, and dependencies tagged using CATKIN_DEPENDS and DEPENDS in catkin_package in CMakeLists.txt would always be the same set, right? So including them just in package.xml should suffice.

No. package.xml defines WHEN dependencies should be installed (which circumstances, such as build or run), and CMakeLists.txt and the catkin_package function define HOW to use those dependencies in C++. (catkin_package does not apply to Python, for example)

Got the WHEN and HOW. I wanted to confirm that dependencies tagged with <build_export_depend> in package.xml, & dependencies tagged with CATKIN_DEPENDS, & DEPENDS in CMakelists.txt are the same set. Thought catkin could automatically populate CMakelists.txt with this info from package.xml

Obviously you don't get it or you wouldn't still be trying to contradict my answer. catkin does not automatically populate any of that information in the CMakeLists.txt from the package.xml