Blink / fade out to where the text-cursor is - Effect?
I don't know of a program that works system-wide, but if you use the terminal moderately, iterm2 has this feature. Pressing Command-/ once will show the cursor with some screen fade, and pressing and holding it will white out everything on screen but the cursor.




Alternatively, not the same as fading, but there might be a way to have your text editor highlight vertical and horizontal columns. (Here's a plugin for sublime).