My main Day/Night idea is simple. I think Larian could implement it fairly easily.

1. Game starts on beach in early morning. Sun has just risen after the nighttime fall from the nautiloid.
2. 1st Short rest moves from early morning to noon. A quick fade out and fade in reveals a change in lighting. Instead of the source of lighting being in the east, it is now directly above.
3. 2nd Short rest moves from noon to late afternoon. A quick fade out again and fade in reveals source of light is now in the west. Shadows are now cast in the opposite direction.
4. Long Rest Button replaces End Day button.
5. If you Long Rest without using any short rests, moon is in the east.
6. If you Long Rest after using 1 Short Rest, moon is directly above.
7. If you Long Rest after using 2 Short Rests, moon is in the west.
8. Each time you Long Rest, you must decide whether or not to fully recover, just like with End Day. This is done via Camping Supplies. If you use them, you receive the full benefits of a Long Rest (meaning recovering spell slots, HP, etc. in full). If you don't use Camping Supplies, or you only use some of them, you only recover in part.
9. Every 10 Camping Supply points allows you to recover 1/4th of your HP lost, spell slots, etc. Thus, 40 Camping Supplies allows you to recover in full.
10. The more people you have in camp, the more it costs for Camping Supplies. Every person forces you to increase your Camping Supply total cost per Long Rest by 10 Camping Supplies. So if you have your MC and all origin characters at camp, that is 60 Camping Supplies per Long Rest.
11. 1st Short Rest at night moves the moon from east to midnight. 2nd moves from midnight to west. If the moon is already in the west and you short rest, it becomes dawn, etc., etc., etc.

So, you can Long Rest all you want, switch from day to night, etc. without sleeping at all simply by not using Camping Supplies. Using Camping Supplies is what limits you from doing tons of Long Rests and relying more on Short Rests. 2 Long Rests, then, constitutes a single day.

In this way, they are using mostly what they've already implemented. All they'd have to do is tie lighting to the buttons they already have in place.