LED lighting can be made more 'magical' by adding an element of diffusion. Traditional lanterns use paint or coloured paper in conjunction with a candle. When using addressable LED's, you may want to let the LED's add that colour instead. As a result, when looking for materials for diffusion, you may want to focus on translucent white materials.

White wrapping tissue paper - This is very inexpensive. It's got some diffusion, and you can still see LED's behind 1 layer of paper. It tears very easily. Ink will bleed a lot on this.

Rice paper - Stronger diffusion. Relatively inexpensive. You can ink it without issue.

Pool cleaning tube - Great diffusion.

White split loom cable - Much thinner than pool tube, also very good diffusion.