Two polygons. One overlays a large polygon over the entire screen, then carves a hole out of the center(when polygon coordinates overlap they invert, or in this case erase). Then another polygon that draws an image where the hole is cut out that represents the circle.
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Kind of like my old lantern script, but adding such that the outside part of the polygon has an alpha channel with a circle gradient image inlaid also applying alpha?:
The lantern script implementation prior to that (we're talking like 2003 now) just overlayed a gradient image onto another already-applied alpha channel (via seteffect), which layered alpha applications instead of letting them cancel one another other out which just made it more foggy/gray instead of clearer when it was dark which bugged me. Meanwhile I thought the hard blackness of the polygon could add to the gameplay dynamic via limiting information, especially for something like a maze room (this one never having been released).
Meanwhile, having multiple circles---definitely never implemented anything like that.
Edit: I didn't realize how old this post was. If this is a problem: sorry.