It doesn't work at all for me either.. light, dark, whatever light.. strange apple has this in their OS and it doesn't work...
You know, you could have a defective device and be driven to needing therapy and never know why?

Kidding....
I believe it's either a bug in 5.0x or Apple didn't get it working the way we'd expected, but it appears to be fixed in 5.1 (I'm running the beta).
I had issues with the LED flash not working too during testing of 5.0 and after the GM came out, and "fixed" it by turning on the two "Vibrate" settings in Sounds panel
and enabling the Custom Vibrations setting in the Accessibility panel.
Keep in mind that for the LED to flash for notifications that Accessibility setting must be enabled (duh, I know), the app(s) you want to get the flash working need to have notifications in the Lock Screen enabled, and for some apps - like the Gmail app - the app's "Sounds" setting in the Notifications panel needs to be enabled as well. Of course, the LED will flash in the Lock Screen or if the device is in sleep mode.
In 5.0x, when I had the settings set up and the 3 vibration toggles set to on my devices worked perfectly for me. Good luck.