It works. In 5.6 (and I guess on later versions too)
The things to know:
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UV has to be correct and the channel selected correctly in the physical material mask asset
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the mesh needs to have the flag Support Physical Material Mask
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the texture can be a simple PNG texture with the correct colors values. (I disabled compress with alpha but I don’t know if it matters)
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Right click on the Physical Material Mask asset to import it
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The mesh needs to use complex collisions instead of the simple ones (probably? haven’t tested with simple collisions)
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The tracing for the hit has to be set to complex (probably?)
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Here’s the real tricky part: YOU CAN’T use a material instance. It simply doesn’t seem to work with a material instance. You need to set this up as a material on it’s own.