I have a function with a Material Instance input, and I would like to get a vector parameter from that Material Instance input. However when I try I get an error, which says “Material Instance Reference is not compatible with Material Instance Dynamic Reference.” See below.
Yup, you need to create a dynamic mat. instance.
You can see a simple blueprint setup here
No point for me to explain about it here, there are plenty of tutorials out there that can explain it much better than me 
Oh wait, I see the error of my ways. I set the function input to Material Instance instead of Material Instance Dynamic! Thanks for helping me to at least realise my mistake.