So, the sphere mask is what creates the sphere like effect around the specific point.
The reason you get artifacts is just that… it is calculated as a 3d sphere. Which may or may not be affecting geometry further out.
To get a different effect you can use a different mask. To do that you would need some more knowledge of how materials work. It isn’t immediate.
As far as Diablo goes. in 1, the walls were simply transparent (and not even that but dithered transparency so it was cheap. Basically fuzzy). However the effect was applied to the whole object/wall.
In D2 the effect was very similar. But it happened differently based on the characters position and was a sudden jump.
in D3 the meshes were better split and used full transparency. So you could have ceilings give way to the character entering a building. Again, the effect was complete, across the whole object.
As an alternative. Laryan’s best game yet, Divinity 2. Had a very interesting fade effect based on either vertex of the mesh or a 2d mask that created the view hole while adding in some extra cool effect to the visual.
Also less intensive since you slap it on the base materials as a function and you won’t need to mess around with splitting up meshes for the ceiling/wall etc.
So, TLDR. Make a circle with the outside black and the inside white, plug it into the final lerp, and see what it looks like…