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The red light can only be added to the level Sandbox in Halo 3 and only two at a time. The red light casts a red glow over a significant area and is meant to show that the base belongs to red team. The red light's counterpart is the Blue Light.
If two red lights and two blue lights are added to the same map variant, they do not cast light, they just glow, this is probably due to graphics capabilities. On Sandbox, there is one Red Light and one Blue Light by default map type. A red light placed near a blue light casts a purple glow.
The Red Light returns in Halo: Reach and Halo 4 along with various other colored lights.