Externally, the lights are seen to banish darkness. Conceptually, they convert prosaic substance into illumination, a transformation akin to the search for enlightenment. The outer meaning of the offering of butter lamps is that one of six such virtues, the Perfection of generosity which is achieved by giving away the valuable substance, butter or oil. As the butter lamps burn, the smoke visible or not, goes to Space.
The inner meaning has to do with burning up gross matter and transforming it into energy thereby providing light in darkness. Here the lamp has the further, probably universal or archetypal meaning of illuminating wisdom. That which reveals and in so doing chases away shadows and obscurations.
The secret meaning relates to heat, the unseen energy produced by burning which evokes tummo, one of the Six Yogas of Naropa. The tradition of fire sacrifice is a very ancient, even a prehistoric one. It has always represented the presence of sacred energy, and the ability of human beings to manipulate it.