No worries,
Ok to break it down further, you see that there are 2 layers in the example. If you click in the layers tab and then on layer 1 you see in the left hand side that the background colour is set to black, whereas layer 0 is set to white.
Now click on the light source object, there are a bunch of different effects that you can add to objects, this one uses 'destination out' which creates that effect of looking like a flash light (because it is on the layer that has a black background).
If that light object was green instead of white then the light would look green too.
Most important thing to take from that example is that you need to do all your lighting as the top layer.