Quoted from jrpinball:

This light is present on the card tray of many add a ball games that are two plays for a quarter. I remember this from the days when I actually used to PAY to play pinball! When you put your quarter in the game, it would start the first game, and this light would illuminate to remind you that you still had one more game to play. When you hit the start button for your second game, the light would go out. We used to rove up and down the aisles of games in the arcade hoping to find a game with the light on. This would be a free game if you were lucky enough to find one lit.