its the "stability system" when a building part is placed the system will check if the placed part is grounded (blue) if not the system will check how well the part is supportet

green to yellow is good supported
yellow is still ok but one might consider supporting this part if possible
red to dark means the placed parts may break if one puts mor parts to it

the LED lightshow only means that when you placed parts onto each other the game rechecks the stability status

the higher you build the higher the risk of breaking parts