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This is done with Fog, specifically depth fog. The fog both fades out the tile and creates that night white glow in the corner where the sun moon is. Depth fog, in contrast to exponential, lets you specify a unit distance where the fog starts and stops, so I could precisely tune it.  My camera is 38 units from the player so even a very, very small density value for exponential fog still causes some haze in the foreground.

Here's my exact settings for the night mode fog: