Youtube encoding doesn't help, but I'm not sure about the "fire" effect here.

It reminds me of when I turned Minecraft's end skybox into a purple-ish Moiré pattern (no shader needed, just a checkerboard texture viewed at a distance+angle).

Back to Godot, I made a toon-like light shader with the step function being the important bit*. It is probably good enough to use, though it's a bit frustrating how I can't seem to keep input colors accurate. Ambient color works acceptably, though I somewhat wish I could control it more, also seeing issues with light range/multiple lights.

I also haven't found a good way to handle light color. I can ignore it or mix color (can look ugly). It's probably possible with dot() but I can't seem to do it right.

Using HSV is probably needed here, although to me it seems like an absolute mess without it being built-in.

* unshaded+1 shadow w/ambient with DIFFUSE_LIGHT = , 5(?) shades with DIFFUSE_LIGHT += but it's also too bright

EDIT: I've figured it out by going by the docs again, I did need ATTENUATION and += to properly handle shadows and multiple lights respectively. I also have LIGHT_COLOR with dot() in a way I like (currently handling it in each rgb channel), though it can still render incorrectly if looking through a spotlight of a different hue (attenuation makes it worse).