"Blue Dot" tail lights seem to be illegal in most US states nowadays (and probably in most other countries, too), but they still seem very popular in the Hot Rod scene. And you can still buy them as 3rd-party parts, even equipped with LEDs.
But I wonder how that fashion started. This article about Blue Dot Tail Lights on MG MGAs says there are many theories about their origin, and that they were never available ex factory.
In contrary to that two posters in this forum thread claim that they were available as option on the Ford Model A and one poster even cited several models from multiple brands that were said to be equipped ex factory with blue dot tail lights while most other posts confirm that they're illegal in most US states since the '60s and that you might get a ticket if they're on your (non-vintage car nowadays. (What doesn't seem to make them less popular…)
There are also some theories that the blue dot makes red lights better visible in fog or red lights better visible at all. The latter doesn't sound that far-fetched, given that most emergency vehicles have either blue flashlights or blue and red flashlights (depending on the country). But then again those blue dots were tiny compared to the rest of the tail light. So was this really the initial idea behind them? (If so, I assume they became forbidden later primarily to not confuse them with the blue flashlights for emergency vehicles.)
Another theory is that those gem-like blue dots were invented just "because it looks cool". My gut feeling says that "being cool" seldomly sparks an invention. So I doubt that for now.
Most of those blue dots look like a cut gem, with quite some plain surfaces. But if that refraction was the relevant part of the idea behind them, why do you see them nearly only in blue and why didn't they survive in red color instead?
Oh, and JFTR: While Wikipedia indeed has an entry about blue dot tail lights it redirects into a list of common terms for custom cars because "blue dots" seem to be one. No explanation where they come from either. sigh
P.S.: This is more an automotive history question than a question about maintenance and repair, but I found no better StackExchange site for this question and there is at least a "history" tag here (with so far only four questions). I also didn't find any site proposal on Area51 for a site covering automotive history. So I nevertheless post it here. Suggestions for better fitting sites for this question are of course welcome. :-)