Magnetic reconnection is commonly considered as a mechanism of solar (eruptive) flares. A deeper study of this scenario reveals, however, a number of open issues. Among them is the fundamental question, how the magnetic energy is transferred from large, accumulation scales to plasma scales where its actual dissipation takes place. In order to investigate this transfer over a broad range of scales we address this question by means of a high-resolution MHD simulation. The simulation results indicate that the magnetic-energy transfer to small scales is realized via a cascade of consecutive smaller and smaller flux-ropes (plasmoids), in analogy with the vortex-tube cascade in (incompressible) fluid dynamics. Both tearing and (driven) "fragmenting coalescence" processes are equally important for the consecutive fragmentation of the magnetic field (and associated current density) to smaller elements. At the later stages a dynamic balance between tearing and coalescence processes reveals a steady (power-law) scaling typical for cascading processes. It is shown that cascading reconnection also addresses other open issues in solar flare research such as the duality between the regular largescale picture of (eruptive) flares and the observed signatures of fragmented (chaotic) energy release, as well as the huge number of accelerated particles. Indeed, spontaneous current-layer fragmentation and formation of multiple channelised dissipative/acceleration regions embedded in the current layer appears to be intrinsic to the cascading process. The multiple small-scale current sheets may also facilitate the acceleration of a large number of particles. The structure, distribution and dynamics of the embedded potential acceleration regions in a current layer fragmented by cascading reconnection are studied and discussed.