Yep, like Zigbee, Matter also supports actual fades (transitions) from 10 milliseconds to around 2 hours (108 minutes to be exact). If the lights implement it correctly, which sometimes seems to be asking too much, it’s buttery smooth.
Brightness fades in Matter are configurable from SmartThings using the Rules API calling the setLevel command (the “rate” parameter is not really a rate but the transition time in tenths of a second, so for 1 second you have to write 10). Color or temp transitions are not available in stock drivers though.
Edit: I’ve decided to post kind of a tutorial to create native Matter transitions: Using Matter transitions (native fading) in SmartThings