This idiom isn't about actual lights or homes; it describes a person's absent response or lack of understanding. He never laughs at jokes; it's like the lights are on but nobody's home.
Pro Tip 2/3
Slightly Offensive
Use careful judgment as the phrase may come off as rude or insensitive when describing someone's intellect. I hesitated to say 'the lights are on but nobody's home' since it could be taken the wrong way.
Pro Tip 3/3
Informal Context
Best used in casual conversations and is considered informal, so avoid using in formal writing or speaking. In the staff meeting, I won't say 'the lights are on but nobody's home' to describe the manager's idea.