It seems like the torch doesn't have much of an effect on sanity. I got to the top of the staircase, but couldn't interact with the console. It's a really cool idea, I'd love a sanity meter or some sort of visual, it's really cool!
If you keep the torch on long enough, you should hear the sanity restore with a sigh. I tried to challenge myself to communicate sanity and battery variables without UI meters. It might still be a little rusty! 😅