> "fading out" the app view over the users homescreen wallpaper

This is done sometimes, but has only limited success. Most users will click the "your computer is infected, click here to upgrade!" fake windows presented by webpage JS on a PC. You really think an app-fade effect will help enough to make a difference? It would help a bit, but not much.

> they don't show an app icon in that view? Why not?

Because then malicious/spammy applications would present fake alerts, which were non-badged normal popups, and add false badges. I guess you could badge everything, and push the problem onto apps whose icons look similar enough to other apps when shrunk down to whatever size your badge is. Either way, it still ends up in the same boat: probably a little bit helpful, but not much.

I'm specifically referring to iOS with the window fade. Of course the issue with it is that the user would have to notice the lack-of the effect on the fake popups (or apps trying to fake the users app icons/wallpaper)

My point is that literally anything would be better than a generic UIAlertController with a password field that exists today, I can fake one in literally ten seconds and have it be remotely triggered by a key on a server to pass through app review. Anything added would enhance security for users.

I believe GP was saying that if there were a fade, it would take you "literally eleven seconds" to fake, and users would be no more likely to nice its presence or absence than they do phishing attempts on desktop computers.