A navigation light is a colored source of illumination on a vessel, used to signal its position, heading, and status.

Basic lighting

To avoid collisions, yachts use navigation lights that permit other yachts to determine the type and relative angle of a ship, and thus determine if there is a danger of collision. Therefore, sailing vessels are required to have on board:

• a green light that lights from dead ahead to 2 points (22½°) abaft the beam on the starboard side,
• a red light from dead ahead to two points abaft the beam on the port side and
• a white light that shines from astern to two points abaft the beam on both sides.

In addition to the above requirements, power driven vessels (depending on their length) must carry either one or two white masthead lights that shine from ahead to two points abaft the beam on both sides. If two masthead lights are carried then the after one must be higher than the forward one.

If the captain sees a craft on a path crossing his own, he will see either its red running light or green running light. If he sees green he has the right of way. If he sees the red light, he knows that the approaching craft has the right-of-way, and he has to deviate from his course to avoid the collision.

part of the information above is from wikipedia