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You can watch it turn on and off while you fly a plane. Also during a vertical drop the light goes off when you drop your speed low enough to <probably> not crash from landing. The light goes off dropping in on Minimus when your speed is below/around 13m/s
After 70km of altitude, while on a sub-orbital trajectory, you can cut your engines and have a green arrow to allow switching to space center and leaving game. When you turn on engines (or try to change your heading), it will go orange again and like the black, you can't exit from here without losing your changes since the last static save. While black is more for in atmosphere physics, orange imparts a vacuum physics state without the air friction heating and lift. So green arrow also means you can jump to warp 5x or greater, hence the green arrows used in that kind of warp. Warp 2x to 4x are all orange, just like the indicator in this vacuum physics state.
Interestingly enough, while starting out on the launch pad, you get a green state, but you can also recover.
As for the round light that turns on orange, it indicates you are falling faster than a safe limit for landing, so yeah... it's a crash warning indicator that doesn't care that you are in a stable orbit. As long as you are between Ap and Pe, this will likely be on unless they are close together.