Why not simply define
bob(x,y):=.....
tom(x,y):=bob(x,y)+x+y
When doing so you have to define bob() above tom().
If you do it as you have show, you wouldn't need to use "bob" as name in the definition of tom() as you will provide the function name not until you call tom().
And yes, you are right, the x and y (and in your example also bob) are just formal arguments. Their name does not matter as long as you use the appropriate names at the RHS and LHS of the definition. It also does not matter if x and y are defined in your sheet and what value they have. The value is determined by the actual arguments not until you call your function.
x:=5 y:=5 z:=5
tom(x,y,f):=f(x,y)+x+y+z
bob(x,y):=x+y
sue(x,y):=x-y
y:=2 z:=100
tom(2,3,bob) =
tom(3,2,bob) =
tom(x,y,sue) =
tom(bob(2,3),sue(2,3),bob) =
tom(bob(2,3),sue(2,3),sue) =
Try to find out the result of the last four evaluation and then verify using Mathcad to check if you have understood the underlying principles.
You might also want to compare tom() to cat():
bob(x,y):=x+y
sue(x,y):=x-y
cat(x,y):=bob(x,y)+x+y
cat(2,3) =
cat(bob(2,3), sue(2,3)) =
.....
