This seems to be a rounding issue with the way InstancedStaticMeshes are rendered. We’ve had one other report of it and I’m investigating it. We have a ticket UE-17458 to fix this issue.
I’m having a related issue in UE4 4.22 with a simple instanced 2d tiling grid. If I rotate the instances, 90 degrees on the Z axis for example, it seems to cause a .0001 & shrinkage and you can see noticeable gaps in what should be a seamless tile. This issue does not occur when I use static meshes.
I looked up the bug report UE-17458 but it is marked as “Won’t Fix”. I will make a new report just in case. Also, notice there is a pull request that is supposed to fix it.
My messy workaround is to automatically add .0001 to the scale if the instance is rotated.