The atomic night light does not work as a light source in the newest experimental. I’ve tried holding it in my inventory, wielding it, and dropping it on the floor at my feet, but it doesn’t increase the light level past “very dark”. Sewing, disassembling, crafting, and reading do not work even when in proximity to the night light.
EDIT: For clarification, the nightlight DOES provide a small circle of light when it’s dark (so you can see the tiles surrounding it, it just doesn’t function as a light source in terms of crafting/reading.