Here is the base representation of the sprite. It's 20% larger than a chunk. The black line shows the chunk boundary. The fade starts 10% in from the boundary and extends 10% past it.
Here are 4 examples at different opacities to show how it blends. I think the effect will be even smoother as a cloudy texture.
In practice you may need to play with the fade a bit, but in general it's just going from full to none but the half way point of the fade is on the chunk line so when it's added back together it's back to the max. But if the adjacent chunk is less intense it doesn't contribute as much and still fades into each other accordingly.
