Had a go at attempting to replicate the effect, since it's not super clear how it works. I used C2 and the paster plugin for drawing and compositing. C3 may be able to do the drawing in some other way.
My first attempt just used a shadowcaster blended with a radial gradient to do the shadows. Made lowres with a lower res paster object. The next step would be to do some kind of bloom to feather the lit area to light the surrounding walls. Maybe could be done with a shader, maybe. Anyways, I stopped there.
The next test did a kind of weighted flood fill to expand light gradually outward from a mouse click. When a wall is hit it wouldn't stop the light but make it reduce quicker. Used sprites as a test and only runs on a click.
The third test used a weighted flood fill as well but in a different way. It referenced a tilemap for walls and used some arrays to keep track of stuff while flood filling. Paster was merely used here to draw the shadow area. The lit area is carved out with a destnation-out blend.
A hybrid between the first and third could look alright. Colored lights could be done with more blending modes with paster instances to do the multiple steps one by one. In C3 you may just need apply the ideas in a similar but different way since paster doesn't run there.
Anyways just some ideas.