Read here www.chinaembassy.org.ro/rom/lsfw/t1046026.htm

This is also valid for Kunming, Chengdu, Guangzhou, Chongqing, Dalian, Xi'an, Shenyang, read here en.kunming.cn/index/content/2014-07/24/content_3638659.htm

Useful information links, thank you, much better than the usual speculation.
There have been some enquiries from those who would want to buck the system. The kickers here are that you must already have the transit ticket to a third country when you arrive in China, and only travellers from 45 countries may apply.

Has anybody done that recently? Does it work for UK Passport holders?

i dont think anyone here has done it, as it would be for transit pax who by definition didnt stay.

I haven't personally, but it does work from watching an American couple go through customs in front of me in Wuhan airport. They told me they were doing the transit visa, saw them get pulled to the side, but later saw them getting their luggage, so assume it went fine. Anyone on the transit visa must register during their stay, even if just one night, otherwise the system will black mark you as having entered China but never registered a stay. Happened to a tourist who used the transit visa but did an airbnb for his stay.

Hainan allows an application for a 30 day tourist visa on arrival.

I did this once, from Hk to home(canada) I stopped in beijing I think for like 8 hour layover and was not allowed to leave the international departure area since my flight was a reasonable time away, customs never gave me any trouble

If you were not allowed to leave the international area of airport, you probably were not issued a transit visa to begin with.

He transit visa is specifically meant to enable you to "tourist" your time in the city instead of hanging in confined space at the airport.