Other mistake: When Claw steals a whole bunch of gold, there seems to be a lot in there. First: How did he get so much gold in there with so little time? They seemed to have been throwing around the gold coins and stuff not to have enough time to do that. Second: Later in the movie you get an above look while they are trying to escape Inspector Gadget, there is less gold in the truck than there was earlier.
Other mistake: When G2 applies lipstick after her torso rejoins with her legs, you can see that the lipstick never actually touches her lips.
Answer: Probably just a common trope seen in movies to indicate something is on or working. It adds a hint of in-movie realism. While it's shown that the claw can be operated manually or through will, it isn't implied the light does anything or tells us anything.