I am not sure the terms of certain things, or even if the shader is meant to be multiplayer compatible, but when it comes to the feature where when you're holding a torch or other light source and it lights up the surrounding area, is there a way to make it so you can see other players doing that too? or is that not a feature/ a bug?

With the "floodfill" setting shader setting -> ambient light -> floodfill it may be possible
otherwise, I only can reliably find the player position, i have absolutely zero information about where or what any other thing in the world is.