It is NOT A SIGN that the PC is on. It's just an indication the Ethernet is working. Even if the laptop is on, in modern routers, you do not see the other person's traffic.
I'm up to 2 reasons there is nothing going on. Until there is something more I'd use my PC and not worry.
My friend recently moved in with me and is now sharing my wireless internet which is secure (but I had to share this password with my friend when he moved in). My friend is rarely home but leaves his laptop on (its closed but the lights are flashing on the side so I know its on). I have asked my friend why he leaves his laptop on when he isn't home and his response was that he pays the electric bill so why do I care. I am very suspicious about whether or not he is spying on me with his computer whether it be recording me or through spyware/keylogger programs I need to find a way to protect my information on my computer and find out if he is spying on me or not. Any advice on how I can figure this out and protect my privacy would be greatly appreciated.