"Red-lighted" means that if a circus worker falls ill or lame he can be hurled from the train in the middle of the night and left for dead. This is one of the ways that Uncle Al intimidates his workers. If he feels that have committed an especially egregious offense, Uncle Al has them red-lighted when the train goes over a trestle, causing them to die.
The worst incident of red-lighting occurs in Chapter Twenty-Two after an injured Jacob goes to August's room in a rage, but does not find him. When he returns to the train car Jacob calls out for Camel and Walter. Jacob thinks,
I want to believe they survived. I try to picture it--the two of them rolling out onto the mossy forest floor amid indignant curses.
Unfortunately, Jacob learns from some of the other men who were red-lighted, but made it back to the camp. They said Walter's legs were broken and Camel hit his head on the rocks when they were thrown from the train over a trestle.