If the light is in a closed room with windows and viewed from outside, the walls of the outside will not be lit since their backs face the light, so that will look correct, however the light could effect other objects that face the light outside the building. To fix that we can have the light decay with a quick exponential falloff, so at that further distance, the light is very attenuated. However, in general this light will shader not create full shadows, just lower light level with distance or with faces not facing the light.
Yes, blue, red (and white) are the fragment lights. The light varies across the face, instead of being the same across the entire face.