Those lights around the lens are for the super macro mode. I've actually never used them. I bought the camera specifically to abuse in the swimming pool, where I drag it around and dunk it all summer long. I've had the WG-1 for two seasons now, and it's been worth every penny I paid for it. I've gotten some super action shots of my grandchildren swimming and diving, even in fairly dim evening light.
When summer ends, I just clean up the camera and store it away for the next year. I haven't really seen the need to upgrade the WG-1. It is what it is. It's very rugged and can take a real beating under water, being bonked against the concrete steps and pool side, and tossed in the trunk of a car through the hot summer weather (it reached 107 several days here this summer). It's fine for snow and cold, too.