A solution for 2D, you can use object position (or vertex position) to get local coordinates

the fact that the answer is "it is by design" and no one is looking into it... Atlas is a must for consoles like the switch that has the hardware of a calculator, now it turns out that we must decide between atlas or shaders because no one thought that we would need to use them together...

This also happens with regular shaders who rely heavily on sprite position and width/height. Not to mention that Unity has the data of the sprite pos inside the atlas quite handy with textureRect/textureRectOffset. Having to modify the shaders themselves for this to work is kind of a pain. Shader Atlas are vital to optimizing mobile gaming performance and pretty much essential to any game that uses AssetBundles. It's honestly disappointing.

This is a problematic design. Simply saying it is 'by design' is a lame reply. Designs can be changed. Sprite Atlases are an important optimization for 2D games, and this design makes it hard to use Shader Graphs with Sprite Atlases. Revising the design to allow easy use of Sprite Atlases with Shader Graphs would be a big help to lots of 2D developers, as evidenced by this thread ... which I can't include because the Unity forms are not on your list of allowed links. :( https://forum.unity.com/threads/shader-graph-getting-local-sprite-uv-from-sprite-sheet.865834/