As you explore in new areas, a higher sight range should clear more of the black fog-of-war around your character, as well as let you see opponents farther away. The actual lighting around your character is not effected (switch the darkness setting in the graphics options to 50 to increase the size of the light radius a bit).
I put a couple points into Elven Sight (which is much more effective than Ranger Sight), but eventually started avoiding equipment with sight bonuses, so my sight range didn't get too much larger than the screen size (I found the fog-of-war on the screen/map handy to keep track of areas I had not explored yet).
From the Locus Inn's
DD info pages;
Elven Sight (Passive)
You can see further and thus target and attack your enemies from afar.
Level 1 Increase sight range with 2. Required level is 1.
Level 2 Increase sight range with 4. Required level is 5.
Level 3 Increase sight range with 8. Required level is 9.
Level 4 Increase sight range with 10. Required level is 13.
Level 5 Increase sight range with 12. Required level is 17.
Your base sight range is 18, so (with any equipment bonuses you may have), an increase of 2 wouldn't make a huge difference, but should certainly be noticeable. You may need to move to start clearing the increased radius after you learn a skill level or equip something with a sight bonus.
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