A lighting model defines various characteristics of the way the lighting for a given image should be computed. For example, should light fall of according to some sort of law? How accurately should the effect of camera distance be modelled? The lighting model contains a number of parameters like this which you may adjust to select your desired speed/realism tradeoff, or just to get the effects you prefer.
The parameters in a lighting model could have been made part of the camera state, but it is often desirable to have several cameras using the same lighting model, so making the model a separate class is cleaner.
If you don't provide a lighting model, Skandha4 will provide a default one.
The model parameters are much like those of the SGI Graphics Library, with some small attempt to be a bit more abstract.