LOL. The subconcious mind is a cunning beast - the ways the lights show up are many, subtle and varied.
Tuesday night I had a very long and vivid dream. During part of it I was in an old area of Brighton in the UK called "Seven Dials" - its where seven different roads intersect. Its there for very busy with lots of pedestrian crossings. In the dream I was crossing the road and the pedestiran light started flasing red - so I changed direction and the light behind me was flashing red! SO I changed direction again and that light was flashing red. Basically where ever I looked the lights were flashing red.
A week ago I had a Lucid where I was flying with my daughter. The sky became full of giant bottles of detergents and household cleaning products that were flying around at random (WTF!!!). We had to fly in and out of them and dodge them. Suddenly something started blowing them up using red lazers.... I woke up - knew the REM DReamer had worked and then went into a nice DEILD.
Often it takes the form of burning bright sunlight flashing off a window. I think when the brightness setting gets to about 6 its so bright you get the sensation of heat in the dream - eg burning bright sunlight.
Police/ambulance flashers are another popular one.
The ways the lights appear in dreams are so varied its actually hard to realize whats going on. hence I find I get the best results when the cues actually wake me and I can then DEILD or WILD.
I keep training with the REM Dreamer. Its good to put it in preview mode, trigger the cues and while they flash keep repeating "Im dreaming, these red lights mean I am dreaming, etc" over and over. With time I hope this will bear fruit.