Let me preface this by saying that the following is conjecture based on
heresay.

I believe these lights are used by law instead of headlights within the
city limits in a great many european cities. I think the reason for this is
so drivers aren't blinded by the lights of oncoming vehicles (it also puts
to rest the question of "Did that guy have his high beams on?"). The lights
are there more to show other drivers where you are than to light the way in
front of you (evidently they think the streets are lighted well enough that
you don't need headlights in the city).

Sean B.
'90 V'gon, "Happy Bus", soon to be pseudo Wolfy
Torrance, CA
http://vgonman.vwtrek.com