From Diablo Wiki
A "light radius" is a circle of illumination around a character, monster, or other object. These were present around all characters in Diablo I and Diablo II, and played a major role in the game mechanics as well as the visuals. Players could use equipment to increase or decrease their light radius, and this affected how much of the screen players could see, as well as how close monsters had to be to "see" (react to/attack) the character. It was possible to play in "stealth mode," especially in Diablo I, and use -light radius equipment to move very close to monsters before they would react.
There is no "light radius" in Diablo III, since it did not work very well, visually, with the 3D lighting effects in the dungeons. Instead of a circle of light around the character, Diablo III's dungeons have colored mood lighting sources all around the levels, which the team feels adds more atmosphere, without detracting from the gameplay.
 Light Radius and the Art Controversy
The lack of a light radius was a point of much debate shortly after Diablo III's debut in June 2008. The lack of a light radius played into many of the arguments around the Art Controversy, and Jay Wilson commented on the topic during a 2008 interview with Mtv.
- Another part of the game that some hardcore fans missed was having a light radius follow the player's character. Because some of the areas of past "Diablo" games were so dark, the player had a circle of light following them around to help them navigate the depths of dungeons. Wilson said the team tried to make use of the light radius, but it just didn't work with a 3D engine.
- "It looked really bad," he admitted. "If you took an environment and you basically lit the whole thing up with just a flashlight, it works way better in a 2D game... we've really found that you needed other light sources to be able to make the game look good." However, that doesn't mean the beloved light radius won't show up in Diablo III. "Not in all dungeons, but there might be in some," he revealed. "I think people really remembered it in like one or two places where it was prevalent in 'Diablo II,' but forget that it almost didn't exist in the other 90 percent of the game.
- But if we can find one dungeon where it's really good to use it, and we can create a lot of gameplay out of it and make it look cool, then yeah, we'll do it. And it's not like within the team there's a lack of desire to do that, it's just that we don't want to do it if it's not going to play well or it doesn't look good."
 Later Comments
The issue began to come up again in 2011 as the game drew closer to the beta test and release, and new fans who hadn't paid any attention back in 2008 started to ask the same questions. Diablo III Community Manager Bashiok replied to a question about it in September 2011:
We try to keep the visuals changing from area to area, even within the same Act. It keeps the game interesting, and is its own reward when a player makes it to that next area and the color palette does a complete shift and the area changes from a dark and foggy moor with blues and greens to a starkly clear dungeon with reds and purples. It's a very powerful way of reinforcing progression. Most people don't think about it as a gameplay mechanic, but it absolutely is.