Why does the wood get cloudy when I build with matte varnish?

It is not usually recommended to build up coats of varnish with a matte or satin finish product, especially when there is a gloss version of the product available.  

Matte and satin finish versions of a product contain a flattening agent that lowers the sheen of the cured product. This flattening agent actually has a slight opacity of its own, and, over a number of coats, it can appear to give a cloudy or milky image.  

When varnish is built up with a gloss material, it has the most transparency, which leads to the deepest and most clear grain. For the final coat, sand lightly and finish with one coat of the desired matte or satin varnish.