Yeah I guess that's how it works, using the function appears to make it so the game changes so that you are in permanent darkness (The indicator on the clock also shows this.) but in doing so several ambient lights are turned off.
This is also probably why mutants still attack you whereas humans don't react until you bump into them or make some noise near them.
the purpose of the option is to help in missions where literally you have to have stealth and basically it scripts you to fail if you are 'seen'.. I don't plan to change it or do anything else with it. if it is useless we will remove the option.. I don't plan on trying it with every creature on every mission in every map with every light using each different gear or gas mask, etc.
best,
Cal