Since the early 1960s, alloys are commonly grouped into two classes that feature either bound states in the band gap (I) or additional, nondiscrete band states (II). Consequently, one can observe either excitons bound to isoelectronic impurities or the typical band edge emission of a semiconductor that shifts and broadens with rising isoelectronic doping concentration. Microscopic parameters for class I alloys can directly be extracted from photoluminescence (PL) spectra, whereas any conclusions drawn for class II alloys usually remain limited to macroscopic assertions. Nonetheless, we present a spectroscopic study on exciton localization in a mixed-crystal alloy (class II) that allows us to access microscopic alloy parameters. In order to illustrate our approach, we study bulk InxGa1-xN epilayers at the onset of alloying (0 <= x <= 2.4%) in order to understand their robustness to point and structural defects. Through 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, i.e., their conversion from a free to a bound particle upon alloy formation. Already at x = 2.4% the exciton diffusion length is reduced to 5.7 +/- 1.3 nm at a temperature of 12 K; hence, detrimental exciton transfer mechanisms toward nonradiative defects are suppressed. In addition, the associated low-temperature PL data suggest that a single indium atom cannot permanently capture an exciton. The low density of silicon impurities in our samples even allows studying their local indium-enriched environment at the scale of the exciton Bohr radius based on impurity bound excitons. The associated temperature-dependent PL data reveal an alloying dependence for the exciton-phonon coupling. Thus, the formation of the random alloy can not only be monitored by the emission of various excitonic complexes, but also more indirectly via the associated coupling(s) to the phonon bath. Micro-PL spectra even give access to a probing of silicon bound excitons embedded in a particular environment of indium atoms thanks to the emergence of a series of individual and energetically sharp emission lines (full width at half maximum approximate to 300 mu eV). Consequently, the present study allows us to extract microscopic properties formerly mostly only accessible for class I alloys.