Answer:
It shows they were all trying to witness what was happening
Step-by-step explanation:
In the text is established that everyone was turning on their lights to see what was going on.
Carnivals are parades with thousands of people all watching a show, there are a lot of lights and even fire for some shows.
This description compares the neighbors to the spectators in a carnival, compares the houses to the lights and establishes the fire as the main show.