The line fading effect uses the attribute register 3C0h index 14h. VGADOC says: "Note: this register does not affect 256 color modes." The demo runs in 256 color mode.
I've tried the following cards:
ET4000AX TC6058AF - perfect
ET4000AX TC6059AF - no line fading
ET4000AX TC6100AF - no line fading
ET3000AX 11038F-0005 - no line fading, flood fill problem
S3 Trio class - problems with picture bouncing, wobbling, flood fill, zooming, no line fading
TVGA8900B - problems with picture bouncing, wobbling, flood fill, no line fading
OTI037C 8 bit - problem with wobbling, y-zooming, no line fading
KU82706 - problems with picture bouncing, wobbling, no line fading
So Tseng Labs fixed an incompatibility in later chip revision. This also means that DOSBox has a bug 😉.
This demo was written for the TC6058AF.