Thin instances support per-instance alpha but regular instances do not

Bugs
1

Title describes the issue - full instances will only use the source mesh’s alpha.

Demo

Relevant state info

// mesh1 is a full instance, mesh2 is a thin instance
{
  "mesh1.isVerticesDataPresent(BABYLON.VertexBuffer.ColorInstanceKind)": false,
  "mesh1.hasInstances": true,
  "mesh1.hasThinInstances": false,
  "mesh2.isVerticesDataPresent(BABYLON.VertexBuffer.ColorInstanceKind)": true,
  "mesh2.hasInstances": false,
  "mesh2.hasThinInstances": true
}

Relevant locations in the codebase

Based on the state above, INSTANCESCOLOR will not be defined for full instances:

Resulting in the following line not being compiled into the shader:

2

You are using color which maps normally to vertex color but has been kept for back compat so in this case you could let the mesh know to use vertex alpha: https://playground.babylonjs.com/#33VCB1#1