‘Distance to nearest surface’ is going to return the distance in centimeters. Since you are clamping the value between 0 and 1, it makes sense that you’d basically see no soft transition between black and white
Scale the value by multiplying it with some small number (like 0.001) to get a softer transition.
In the pictures above, a static mesh plane is intersected by a sphere, cube and cone (all with a transparent material). The DistanceToNearestSurface-Material covers the static mesh plane. So, for the lerp alpha should be ~0 at the intersection areas such that they are painted white. But it’s just the other way around. Why is that? How can I modify my material, such that the intersection areas are precisely colored?