  Since the early 1960s, alloys are commonly grouped into two classes,
featuring bound states in the bandgap (I) or additional, non-discrete band
states (II). Microscopic material parameters for class I alloys can directly be
extracted from photoluminescence (PL) spectra, whereas any conclusions drawn
for class II alloys usually remain indirect and limited to macroscopic
assertions. Nonetheless, here, we present a spectroscopic study on exciton
localization in a so-called mixed crystal alloy (class II) that allows us to
access microscopic alloy parameters. We study bulk In$_x$Ga$_{1-x}$N epilayers
at the onset of alloy formation (0 $\leq$ $x$ $\leq$ 2.4%) in order to
understand the material's particular robustness to defects. Based on an
in-depth PL analysis it is demonstrated how different excitonic complexes
(free, bound, and complex bound excitons) can serve as a probe to monitor the
dilute limit of class II alloys. From an $x$-dependent linewidth analysis we
extract the length scales at which excitons become increasingly localized,
meaning that they convert from a free to a bound particle upon alloy formation.
Already at x = 2.4% the average exciton diffusion length is reduced to 5.7
$\pm$ 1.3 nm at a temperature of 12 K, thus, detrimental exciton transfer
mechanisms towards non-radiative defects are suppressed. In addition, the
associated low temperature PL data suggests that a single indium atom does not
suffice in order to permanently capture an exciton. Micro-PL spectra even give
access to a forthright probing of silicon bound excitons embedded in a
particular environment of indium atoms, thanks to the emergence of a hierarchy
of individual, energetically sharp emission lines (full width at half maximum
$\approx$ 300 $\mu$eV). Consequently, the present study allows us to extract
first microscopic alloy properties formerly only accessible for class I alloys.
