Quote from Mindseye >>

If I'm gonna use a third level spot to dispel darkness, I'm gonna use Fireball to dispel caster.  Guano is cheaper than a 50gp ruby each time.

Neither Fireball nor an upcast Continual flame would dispell Darkness. (Though the former may break concentration, sure). What both could do, at least temporarily, is light up an area covered by the magical darkness.

Neither would do anything temporarily.  Either Continual Flame Permanently lights the area surrounding it (which I don't think it would) or the Darkness overrides them, and no light is seen.  Fireball wasn't intended to break concentration (although it should make a good shot at it), it's meant to be used turn after turn until the caster doesn't have to worry about concentration anymore. :D

Darkness states,  "A creature with Darkvision can't see through this darkness, and nonmagical light can't illuminate it.". The function of the spell is twofold.  It creates darkness, and said darkness cannot be illuminated by nonmagical light.  Clearly implying that it can be illuminated by magical light. It further clarifies by stating, "If any of this spell's area overlaps with an area of light created by a spell of 2nd Level or lower, the spell that created the light is dispelled." Thus we know the only magical light that can illuminate it is that created by a spell of 3rd level or higher. Continual Flame cast at 3rd level would qualify as light created by a spell of 3rd level or higher. The darkness isn't dispelled,  it would just be illuminated while the areas of the magical light from the flame and magical darkness overlap. 

I thought using a higher spell slot only mattered if the spell had additional effects at higher spell levels.  Otherwise, it's still a 2nd level spell, you just used a higher slot to cast it.

As norishiudo quoted before in the basic rules, when a spell is cast with a higher level spell slot it becomes that level spell. Take dispel magic or counterspell as instances where this is relevant. You could cast any spell at 9th level, and it would be a 9th level spell. I've seen some people state that this only takes precedence when the spell mentions that an additional effect takes place when upcast, but there is no rule stating this. The rule specifically states "When a spellcaster casts a spell using a slot that is of a higher level than the spell, the spell assumes the higher level for that casting." Full stop.

Ok, Cool.  My understanding was that it only counted when there were higher level effects.  I want to say that I've seen it otherwise, but since I can't find (or be bothered to look) I'll accept this ruling for it.  

had a charlatan priest/rouge .cast it on crapy weapons ,and sell then to a dimwited small town shop owner. for a bargain price.

Ikkia to Sabre:
Ikkia- at the end of the day can you use strongest spell to make my tongue ring forever lit.  

Sabre- are you asking for us to make your very breath and words spoken spring forth through fire that may forever keep darkness at bay..?

This should have a note in the "Available For" field that Druids can take it if using the Tasha's options.

that does sound pretty badass

https://www.sageadvice.eu/2016/08/06/continual-flame-on-item-then-brought-into-area-with-darkness-spell/

Cast this spell on your tongue for a hands-free retractable flashlight. 

Quote from Guardian888 >>

https://www.sageadvice.eu/2016/08/06/continual-flame-on-item-then-brought-into-area-with-darkness-spell/

 This may be RAI, but isn't RAW. I wouldn't consider it RAF, either.

Compare globe of invulnerability, which explicitly calls out spells cast at a higher levels; darkness lacks this distinction.

Would the flames produced by this spell ignite flammable liquids or gases? It produces no heat and doesn't use oxygen, but it doesn't state that it is an illusory effect. That means it is a magical flame that just doesn't burn anything on its own, right? So if used in conjunction with a flamethrower that can spew flammable gases or liquids could you make a continual flame pilot light for it? Alternatively if a person wearing a continual flame item is doused in flammable substances would that continual flame ignite it? "but not smothered or quenched." means it can exist underwater, well that it will at least ignite again when it isn't covered in water; so a liquid or gas could easily pass through it I just don't know if it would ignite it.

Actually looking into how fires spread it seems I have my answer, I'll keep the question and this answer just as a reference for others. Fires spread via Heat Transfer in three different forms. 1: Radiation, heat moves through a space as energy waves - the heat you feel from a fire is this heat transfer(also how we get sunburned) 2: Convection, basically hot air is lighter than cold because the molecules expand when excited, which is why heat rises, this is a physical heating of an outside component such as air and not an energy wave like the first method. 3: Conduction, the transfer of heat within a material itself, basically the same concept as 2 but with solids instead of air. It is also the main reason heat metal works in this game.

TL:DR This spell doesn't conduct heat and in thus can not spread fire.

@NoMoPanda: Correct.

A torch lit with Continual Flame is safe to stick in a backpack, even for extended periods of time. There is no risk to the backpack or any of the other contents.

Do you have links where the designers have officially started upcasting does not work this way?

Page 201 of the PHB states that upcasting does make the spell a higher level spell.  It even confirms that this can be done with spells that don't have more powerful benefits written upcast, by stating that "some spells have more powerful effects when cast at a higher level."    If upcasting was only for spells with more powerful benefits then it would literally say that.   It doesn't.

"Casting a spell at a higher level.

When a spellcaster casts a spell using a slot that is of a
higher level than the spell, the spell assumes the higher level for that casting. For instance, if Umara casts magic missile using one of her 2nd-level slots, that magic missile is 2nd level. Effectively, the spell expands to fill the slot it is put into.

Some spells, such as magic missile and cure wounds,
have more powerful effects when cast at a higher level, as detailed in a spell’s description."

I've never understood the point of Darkness, except for devil's sight warlocks; Fog Cloud is 1st level, scales in size, and has none of Darkness's  weaknesses.

While both spells can be dispersed by different things, fog cloud is stationary while darkness can be cast onto something and toted around or even shaded to block its effects. Granted, the lower duration undermines this use compared to fog cloud lasting an hour, but it's there, for what it's worth.

The only way I can imagine using that is by casting it on a rogue so they can disengage and keep enemies out of the darkness, but it does seem useful in a situation similar to that.