They set up trees with lights to light up things amidst the [thick and] extensive [foliage of] betel-nut, banana and other trees that could not be seen because of darkness.

“Trees of lights” refers to tree-shaped pillars with lamps. The residents set them up in order to see Rāma who would come out [of the palace] after the coronation, decorated and sitting on an elephant; if circumstantially, that happens at night, they would be able to see Him [well illuminated] by the trees of lights.

NOTE. We come across a similar passage in Śrīmad-Bhāgavatam (1.11.13-15) describing how the residents of Dvārakā had once
prepared to receive Lord Kṛṣṇa. It is presented below with Śrīla Prabhupāda’s translation and purport:

gopura-dvāra-mārgeṣu kṛta-kautuka-toraṇām
citra-dhvaja-patākāgrair antaḥ pratihatātapām

“The city gateway, the household doors and festooned arches along the roads were all nicely decorated with festive signs like plantain trees and mango leaves, all to welcome the Lord. Flags, garlands and signs painted with slogans all combined to shade the sunshine.”

PURPORT. Signs of decoration in special festivals were also collected from the gifts of nature, such as the plantain trees, the mango trees, fruits and flowers. Mango trees, coconut palms and plantain trees are still accepted as auspicious signs. The flags mentioned above were all painted with the picture of either Garuḍa or Hanumān, the two great servitors of the Lord. By devotees such paintings and decorations are still adored, and thus the servitor of the master is paid more respects for the satisfaction of the Lord.

sammārjita-mahā-mārga-rathyāpaṇaka-catvarām
siktāṁ gandha-jalair uptāṁ phala-puṣpākṣatāṅkuraiḥ

“The highways, subways, lanes, markets and public meeting places were all thoroughly cleansed and then moistened with scented water. And to welcome the Lord, fruits, flowers and unbroken seeds were strewn everywhere.”

PURPORT. Scented waters prepared by distilling flowers like rose and keora were requisitioned to wet the roads, streets and lanes of Dvārakā-dhāma. Such places, along
with the marketplace and public meeting places, were thoroughly cleansed. From the above description, it appears that the city of Dvārakādhāma was considerably big, containing many highways, streets and public meeting places with parks, gardens and reservoirs of water, all very nicely decorated with flowers and fruits. And to welcome the Lord, such flowers and fruits with unbroken seeds of grain were also strewn over the public places. Unbroken seeds of grain or fruits in the seedling stage were considered auspicious, and they are still so used by the Hindus in general on festival days.

dvāri dvāri gṛhāṇāṁ ca dadhy-akṣata-phalekṣubhiḥ
alaṅkṛtāṁ pūrṇa-kumbhair balibhir dhūpa-dīpakaiḥ

“In each and every door of the residential houses, auspicious things like yogurt, unbroken fruits, sugarcane and full waterpots with articles for worship, along with incense and candles, were all displayed.”

PURPORT. The process of reception according to Vedic rites is not at all dry. The reception was made not simply by decorating the roads and streets as above mentioned, but by worshiping the Lord with requisite ingredients like incense, lamps and flowers, along with sweets, fruits and other palatable eatables, according to one’s capacity. All were offered to the Lord, and the remnants of the foodstuff were distributed amongst the gathering citizens. So it was not like a dry reception of these modern days. Each and every house was ready to receive the Lord in a similar way, and thus each and every house on the roads and streets distributed such remnants of food to the citizens, and
therefore the festival was successful. Without distribution of food, no function is complete, and that is the way of Vedic culture.