I'm not sure if this is completely finished or not; any pointers will be highly appreciated

The idea is that there is a specific way to show travellers that they are close to an elvish settlement. It started out this way because the elves were originally nomadic, so that the need wasn't so much permanent signs as something which could easily be removed. When they started to settle down the way to mark their settlements stayed the same.

The light is magical and will not die out until the lamp is taken down. It is made to be visible, not to illuminate things around it, which is why it has a pretty narrow reach even though the lamp has a strong glow.
The tree is a special kind of tree, most often referred to as the Guidance tree and thus it has become a symbol for guidance in general and has a huge place in elvish rites and their cultus. When facing a difficult choice one would often meditate at the foot of such a tree (though generally not one with a lamp in it, although the trees are often far between). The red berries in the tree are poisonous unless prepared in a very specific way, although not well-tasting in any case, and is only used by magicians and priests in their rituals.

So, a lot of backstory. Hope you like the picture, it was fun painting a forest for a change (although the lamp was insanely difficult).