WTF?

Transformer

trait Functor[F[_]]

object Functor {
  implicit val OptionFunctor: Functor[Option] =
    error("")
 
}

case class OptionT[F[+_], +A]

object OptionT {
  implicit def OptionTFunctor[F[+_]](implicit F0: Functor[F]): Functor[({type λ[α] = OptionT[F, α]})#λ] =
    error("")
}

trait TTT {
  // fine
  val a = implicitly[Functor[Option]]

  // fine
  val b = implicitly[Functor[({type lam[+a]=OptionT[Option, a]})#lam]]

  // not fine
  val c = implicitly[Functor[({type lam[+a]=OptionT[({type l[+b]=OptionT[Option, b]})#l, a]})#lam]]
}

Oh, I missed the key point of your example. It's an interesting one. A bit of a closer look at it:

case class Wibb[A]

trait Functor[F[_]]

object TTT {
  implicit val WibbFunctor: Functor[Wibb] =
    error("")

  implicit def OptionTFunctor[F[_]](implicit F0: Functor[F]): Functor[({type λ[α] = OptionT[F, α]})#λ] =
    error("")

  type Q[A] = OptionT[Wibb, A]
  type R[A] = OptionT[Q, A]
  type S[A] = OptionT[({type l[b]=OptionT[Wibb, b]})#l, A]

  // okay
  OptionTFunctor[({type l[b]=OptionT[Wibb, b]})#l](OptionTFunctor[Wibb](WibbFunctor)): Functor[S]
  OptionTFunctor[Q](OptionTFunctor(WibbFunctor)): Functor[R]
  implicitly[Functor[R]] // Infers [Q] !

  // a bridge too far
  // OptionTFunctor(OptionTFunctor[Wibb](WibbFunctor)): Functor[S]

  // Can't infer [Q]
  // OptionTFunctor(OptionTFunctor(WibbFunctor)): Functor[R]
}

Yeah, that's exactly the point. I will hopefully take a look at it closely soon.