During hours of darkness, navigation lights MUST be displayed. Navigation lights help you determine whether an approaching vessel is operating under power or sail, and its direction.
You can learn a lot by looking at the lights: the red and green lights on a boat are side lights and assist in determining the direction the boat is facing. Red lights are on the port, or left side, while green lights are on the starboard, or right side. If you see only one side light, you are looking at that side of the boat. If you see both lights at the same time, that means that the boat is either headed towards you or away from you. If the red light is to the right, the boat is coming towards you (Red-Right-Returning). If the green light is to the right, the boat is going away from you.