I think it's because the game engine doesn't support more than 3 or 4 light sources. When you have 2 it can also happen that you approach another light source (such as another player's source lights, the sun, or a high albedo planet that "reflects" light) and yours will start to glitch because the total exceeds what the game can handle.
I don’t believe that works, as I have changed the docking lights on one of my ships and it still allows me to toggle them on and off. So i imagine it’s a hardpoint feature and not a light based one.
Yeah, you're right, it's assigned to hardpoint. I'm sure admins would be able to remove them with ease but it would be a bit odd SRP. I guess best solution to it would be assigning small lights with color similar to your ship's hull. They really are small and subtle.