This shader will be able to:

Change the outline thickness
Change the colour of all outline
Change the colour of specific actors outline
Apply on specific actors (Custom Depth Mask)
Control thickness based on distance (Distance Masking)
Limit grazing artefact (Line too thick when camera is against object)

This outline shader is a PostProcess effect that will analyse what is shown on the screen, detect edges, and draw outlines.
We will use Depth Edge Detection obfuscating edge outlines, and Normal Edge Detection for sharp edges.

NOTE: I will re-write this in future and replace images with blueprintUE embeds.

Apply Post Process to the Scene

Make a PP_OutlineShader material, preferably in /PostProcessing
Set the Material Domain to Post Processing
Set the Blendable Location to Before Tonemapping
Right Click on PP_OutlineShader, and Create Material Instance, call it PPI_OutlineShader
Add a PostProcessVolume to the level.
Add a Post Process Material to the PostProcessVolume, and set it to the PPI_OutlineShader
Add a SceneTexture:PostProcessInput0 node, and plug it into the outputs Emission

MF_GetKernal (Convolution Kernel)

Create folder PostProcess/Functions
Right Click > Materials > Material Function
Create MF_GetKernal
In MF_GetKernal, copy/paste the output 4 times
Name them Left, Right, Up, Down
Set the Sort Priority of each one to 1,2,3,4 respectively
Create a FunctionInput node, call it Width, and change it’s input type to Scalar
Create a Constant of 1, and plug it into the Input node
And then:

MF_DetectEdges_Depth

Create another Material Function

How to use MF_DetectEdges_Depth in the PP_OutlineShader

REMINDER: We must add the PPI Material Instance to the PostProcess Volume.

Gameplay

Grazing problem (outlines at steep angles) we will fix later.

MF_DetectEdges_Normal

The Distance nodes are Utility>Distance
Input Threshold of 1, we don’t need inside or outside edges, as the MF_DetectEdges_Depth function does that already.