The LED in an electricity meter typically indicates whether power is applied to the unit and may flash at a rate proportional to the power consumption. Installation height for electricity meters is generally around 5 feet from the ground for easy readability. The discussion also touches on the historical practice of using circuits to count LED pulses for data logging. There is some confusion regarding the image referenced in the conversation, with participants seeking clarification. Overall, the thread highlights the functionality of the LED and installation standards for electricity meters.