How light affects sleep?

Sleeping with the light on can impair a person's body clock. Research has shown that the body clock is negatively affected even if the person continues to doze off. The research into the effect of light on sleep can help foster new treatments for various sleep disorders.
Being exposed to light at nighttime can trigger a chemical process that can operate as a neural switch that can switch the sleep/wake cycle on and off. By nature, the sleep/wake cycle is run by the pineal gland. The pineal gland, located in the brain, secretes melatonin. The production of melatonin is at its peak when a person sleeps.
An enzyme called AA-NAT or N-acetyltransferase is involved in the production of melatonin. This particular biochemical machine can cause the production of melatonin to turn on and off. High levels of the AA-NAT enzyme can produce high levels of melatonin to induce sleep. In general, the pineal gland shields the AA-NAT enzyme from being destroyed by proteasomes or barrel-shaped cell structures.
Turning on a bedside lamp at nighttime can block the stimulation of the pineal gland causing the AA-NAT protein to be destroyed by the proteasomes. This results in a continuous drop in the level of melatonin secretion. Exposure to light can help control the production of melatonin. At the same time, it also increase the chances to have cancer.

What is melatonin?
Melatonin is a hormone naturally produced every day by the pineal gland, which is located deep in the brain. Healthy young and middle-aged adults generally secrete about 5 to 25 micrograms of melatonin each night. This amount tends to decline with age, and this decline is possibly linked with an age-related rise in sleep difficulties.
Melatonin is sometimes described as the sleep hormone, but this is not correct. It is not geared to the sleep cycle, although it may help you fall and stay asleep. It is produced in the dark, regardless of whether or not the person is sleeping. Hence its name, which was coined in 1958 from the Greek word, 'melas,' meaning 'black.' Theoretically, you could be up and about in the dark (such as listening to the radio) and still produce the normal amount of melatonin.

At dusk, the decrease in sunlight sends a signal that stimulates the pineal gland to produce more melatonin. Hormone levels then continue to rise steadily for hours, peaking at around 2 a.m. (3 a.m. in older people). It then declines sharply as morning approaches. By 8 a.m. or so your melatonin levels are back down to their typical low daytime point, only to start the cycle over again the following evening.

PS : EXPOSED TO LIGHT DURING SLEEP WILL INCREASE THE RISK OF GETTING CANCER!