Hey ,
I took a look at the project you provided and found some areas in which you will want to edit. The first thing I noticed is you are using the Alpha channel for your opacity, which is normal, but your texture’s alpha channel is very white and almost empty. Hence plugging it into the opacity with a near completely white input makes it opaque and hard for light to pass through. Secondly, you’ll need to mark your material as Two-sided in the material properties so it can correctly receive light from both sides.
Lava Texture Alpha Channel
Red Channel as Opacity
I used your red channel to get a more pronounced opacity.
The third part of the issue is the scale in which you are attempting to apply the lights in relation to the scale of your mesh itself. If you want to illuminate a mesh that is 1000 times the scale of the original mesh, you are going to need more than a single light actor. Multiple lights of varying light types used in conjunction with a slight emissive material will produce some good results. This way, when you are at a distance, you will still see the lights fading out, but it will be much less visible as your emissive color will provide a strong visual assistance.
Here is what your set up looks like at a smaller iteration. If you are able to scale this application up then I am sure you can produce the results you are looking for.
Scene Set Up
The fading light you mention is the player camera fading out of the attenuation radius of the spot light actor. Typically, if you are using a light and setting its values to the Max and not getting the results you would like, it is best to scale it back. Add another light type or light source, and work within this new scope, changing your scene to help make your lights more pronounced.
Let me know if you have any other questions.
Cheers,