diff --git a/compiler/src/dotty/tools/dotc/ast/Trees.scala b/compiler/src/dotty/tools/dotc/ast/Trees.scala
index cf3b1359cfe6..d12a85150f6f 100644
--- a/compiler/src/dotty/tools/dotc/ast/Trees.scala
+++ b/compiler/src/dotty/tools/dotc/ast/Trees.scala
@@ -574,8 +574,9 @@ object Trees {
 
   /** A tree representing inlined code.
    *
-   *  @param  call      Info about the original call that was inlined
-   *                    Until PostTyper, this is the full call, afterwards only
+   *  @param  call      Tree representing the original call that was inlined.
+   *                    If EmptyTree: this represents an argument actual tree.
+   *                    Otherwise: Until PostTyper, this is the full call, afterwards only
    *                    a reference to the toplevel class from which the call was inlined.
    *  @param  bindings  Bindings for proxies to be used in the inlined code
    *  @param  expansion The inlined tree, minus bindings.
@@ -587,6 +588,8 @@ object Trees {
    *  The reason to keep `bindings` separate is because they are typed in a
    *  different context: `bindings` represent the arguments to the inlined
    *  call, whereas `expansion` represents the body of the inlined function.
+   *  Call argument trees (whether kept in `bindings` or inlined in the body)
+   *  are typed in the caller's context.
    */
   case class Inlined[-T >: Untyped] private[ast] (call: tpd.Tree, bindings: List[MemberDef[T]], expansion: Tree[T])
     extends Tree[T] {
diff --git a/compiler/src/dotty/tools/dotc/ast/tpd.scala b/compiler/src/dotty/tools/dotc/ast/tpd.scala
index f4f4535931c4..169d9e67c440 100644
--- a/compiler/src/dotty/tools/dotc/ast/tpd.scala
+++ b/compiler/src/dotty/tools/dotc/ast/tpd.scala
@@ -1079,15 +1079,24 @@ object tpd extends Trees.Instance[Type] with TypedTreeInfo {
     }
   }
 
+  //inlineContext, enclosingInlineds, sourceFile and Decorators.sourcePos work closely together.
+
   /** A key to be used in a context property that tracks enclosing inlined calls */
   private val InlinedCalls = new Property.Key[List[Tree]]
 
-  /** Record an enclosing inlined call.
-    * EmptyTree calls (for parameters) cancel the next-enclosing call in the list instead of being added to it.
-    * We assume parameters are never nested inside parameters.
+  /** Record an enclosing inlined call in enclosingInlineds, and produces the context for visiting
+    * Inlined(call, ...).
+    *
+    * Invariants:
+    * - enclosingInlineds never contains EmptyTree nodes.
+    * - if enclosingInlineds.nonEmpty, the current tree comes from the file *defining* enclosingInlineds.head.symbol;
+    *   this is exploited in e.g. Decorators.sourcePos.
+    *
+    * Arguments of inlined calls (enclosed in Inlined(EmptyTree, ...)) come instead from the call-site, so
+    * inlineContext(EmptyTree) pops the enclosing call.
     */
   override def inlineContext(call: Tree)(implicit ctx: Context): Context = {
-    // We assume enclosingInlineds is already normalized, and only process the new call with the head.
+    // enclosingInlineds is already normalized, so we only process the new call with the head.
     val oldIC = enclosingInlineds
     val newIC = (call, oldIC) match {
       case (t, t1 :: ts2) if t.isEmpty =>
@@ -1106,7 +1115,7 @@ object tpd extends Trees.Instance[Type] with TypedTreeInfo {
   /** The source file where the symbol of the `inline` method referred to by `call`
    *  is defined
    */
-  def sourceFile(call: Tree)(implicit ctx: Context) = {
+  def sourceFile(call: Tree)(implicit ctx: Context): SourceFile = {
     val file = call.symbol.sourceFile
     val encoding = ctx.settings.encoding.value
     if (file != null && file.exists) new SourceFile(file, Codec(encoding)) else NoSource
diff --git a/compiler/src/dotty/tools/dotc/printing/RefinedPrinter.scala b/compiler/src/dotty/tools/dotc/printing/RefinedPrinter.scala
index 7ae4192c7bd6..41f97ab21a6f 100644
--- a/compiler/src/dotty/tools/dotc/printing/RefinedPrinter.scala
+++ b/compiler/src/dotty/tools/dotc/printing/RefinedPrinter.scala
@@ -385,8 +385,8 @@ class RefinedPrinter(_ctx: Context) extends PlainPrinter(_ctx) {
       case SeqLiteral(elems, elemtpt) =>
         "[" ~ toTextGlobal(elems, ",") ~ " : " ~ toText(elemtpt) ~ "]"
       case tree @ Inlined(call, bindings, body) =>
-        (("/* inlined from " ~ toText(call) ~ " */ ") `provided`
-          !call.isEmpty && !homogenizedView && !ctx.settings.YshowNoInline.value) ~
+        ((if (!call.isEmpty) "/* inlined from " ~ toText(call) ~ " */ " else "/* inline arg */ ": Text) `provided`
+          !homogenizedView && !ctx.settings.YshowNoInline.value) ~
         blockText(bindings :+ body)
       case tpt: untpd.DerivedTypeTree =>
         "<derived typetree watching " ~ summarized(toText(tpt.watched)) ~ ">"