Hi gray198,
All perfectly normal. Whilst riding on pedelec mode, the lights are just a measure of the voltage available at the terminals, as current is drawn the voltage drops. When you stop riding the lights quickly recover to all 4 lights on. The best check of remaining range is after the bike has been stationary for about 15 seconds or so. Even if you have been showing only one lght during a hillclimb, the battery will quickly recover voltage, although its ability to recover reduces as the charge is used up.
Starting with a freshly charged battery, I can maintain 4 lights (at rest) for about 30 miles with moderate pedalling. Once the static reading at rest shows 3 lights, you have used about 65% of available 'fuel'.
When you are on max assist, the bike will be drawing current most of the time, as lights go out as you ride along you can see how much current is being used. Often, a switch to medium assist will greatly reduce current usage, but you do tend to travel a bit slower or do more work, you'll soon get used to it.
When 2 lights show at rest, you have less than a 1/4 of a 'tank' left. If my planned journey is less than about 36 miles, I tend to go max power all the way because it's fun. With medium effort, 50 miles is easily achieved.
The lights on top of the battery seem to be a little optomistic. My guage reads 2 green lights when it is flat, so I ignore them and rely on the handlebar lights. The battery management system will cut all power long before all the charge is used. It has to keep some charge to maintain stability of the cells.
As you use up the battery, eventually it will cut out under heavy load, but recover if you reduce assistance. At the end it just stops and wont regain power.
Apropos charging, I discharged mine to flat twice to 'condition' it, which I had read was the thing to do. Ever since, if I do more than 7 miles or so, I top it up after pretty much every ride. If you do flatten the battery, you must charge it immediately, don't leave it for a few days or the battery gremlins will come to haunt you!
Glad you're having fun.