I heard the expression frequently in my younger years, and my mother used it often. I didn’t realize it had lost its currency until I saw it used incorrectly in a recent article.
I understand it to mean, literally, that a person is positioned between an object of interest and a light source—casting their own shadow on what they’re trying to see; for example, trying to read something when the light is directly behind them. “Your own light” means the light you are trying to see by—to shine on something. Standing in it, you’re blocking the light, obscuring your own view.
Figuratively, metaphorically, it means to get in your own way; specifically, to hinder your own ability to see or recognize something you need to be aware of. A person who is, let’s say, overcommitted to some cause or ideology or relationship may be preventing himself from seeing what’s right in front of him. I would say he’s standing in his own light.
But now I guess I’ll refrain from using it since it seems too likely to be misunderstood.