Mario gains a jumpsuit and a helmet with a lightbulb. Being based on what a Glow Block could do, Light Mario is able to lighten up darker areas. Not only that, it also reveals most secrets. When Light Mario executes a Spin Jump, it gives more light for a few seconds.
It also gives the ability to kill Boos, a power that is essentially helpful for haunted house levels that you couldn't easily beat without it.