So I have always kept my arcades lights on, and the PA Coin Op Hall of fame is lights off. The game scores are MARKEDLY lower with the lights off. I mean, like it's not even remotely close. Lights off = better visuals, but it's far worse on your eyes trying to track ball movement.
1.) Many games are horribly lit. Spot lighting can help, but only to an extent, as you then have light/shadowing issues. Ambient lighting addresses this.
2.) Games with a lot of flashers and strobe can temporarily burn your retinas, taking at least 10 seconds for your eyes to readjust to the darkness. Ambient lighting offsets this problem almost 100%.
3.) Glare. Backglass/DMD glare onto the playfield is GREATLY magnified and can make it hard if not next-to-impossible to see the rear playfield on some games. I have used bent-plastics to eliminate the display glare, but it does not solve DMD glare. Glare can even occur from adjacent games.
That being said, avoid direct lighting (like cans overhead). Dimmed/diffuse ambient lighting is best.