When starting a game on very early Ballys, all player displays show '00' and the number of players is indicated by the lamps you mention.
Around the time Bally transitioned from mechanical chimes to electronic sounds they changed this behavior so the number of player lamps were no longer used and now player displays would only show a score if that player was involved in the game.

So when you start a new game on your Strikes and Spares, player 1 will start showing '00', all other player displays will be blank. If you add a player, player 2 display will now show '00'. Add another player and player 3 shows '00'. etc.

First game to introduce this was Black Jack which came out before Strikes and Spares. The last release game to continue using the number of player lamps looks like it was Supersonic so there was a 9 month transition period.

I've wondered about this too..............

Some games during the crossover were made in 2 flavors, EM and SS. Strikes and spares did not.

Yes, so the short answer is we transitioned away from player up lamps to the flashing score. This freed up 4 lamp drivers for other features.

Longer answer is the backglass was made for the player up lamps and was already in production when the lamp change was made. It didn't matter except it raised a few eyebrows from the distributor tech support at the time.