REVISION: My understanding of the problem has gone up a bit, so hopefully I can direct this question a little better.
I’m looking for a general guideline on how to create a lantern light effect similar to what’s used in Royal Envoy 2 (reference: Royal Envoy 2 Expert Mode Level 9 ~ 11 - YouTube). Initially I explored the Fog feature in the Render Settings, but the problem with this is that the fog applies to the entirety of the scene and I want to be able to lift portions of the fog by lighting lanterns in the scene.
The two best ways I can think of at the moment to approach this problem are:
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Darken the scene’s default lighting, assign point lights to lanterns and script in the appropriate functionality when other objects are lit.
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Apply a material that emulates darkness/fog in front of the background, cut out appropriate portions of the material whenever a lantern is set to be lit.
The project I’m working on to incorporate this is similar in nature to Royal Envoy 2; most specifically, it’s in 2D. Would either (or both) of these methods work? And if so, how would I go about doing them?