Normally an above water light, although Im sure that some people on here have installed under water lights at their docks. I hang lanterns from the bridges in the summer, and the shad will start boiling under them in about 30 mins.
Generally we're referring to whatever light might be hanging around, above, under, beside or otherwise near a dock on the lake
There are not too many submerged lights - though there are a few around..... most that have bait lights have some type of spot either down close to the water or up on a dock piling - or it may even be a street lamp type having over the front of their covered light.
Depending on where and when the bait will move in on the light from 30 min to a couple of hours - its the whole circle of life thing..... some times of the year (water temperature driven) and times of the month (moon cycle driven) the bait will be there in more density earlier or later....
I don't want to start up the age-old debate of throwing on a dock light - there are at least a couple of other threads on here where we've hashed that out.... but the net/net is the lake is all of ours and if someone has a light out over the water, just be respectful of other folks stuff - keep your boat, net and anything else off their dock/boat/floater/light and what not and 99% of the time we will all get along.... If you see someone hanging out around their dock like they might be catching bait - or just relaxing - move on and throw elsewhere. Several of the marinas have lights of some form which are certain fair game.... again, stay on your boat, off the marina property and all's good.