This came up on a discussion on another board, the 'why aren't all the cities lit up with continual light spells' discussion. My explanation is dweomer mites, similar to cerebral parasites, tiny pests that feed on magical energy. Large numbers of continual light spells, or other permanent effect spells can attract/create swarms which can then cause problems with magical research, item enchantment, potion brewing, etc. Frivolous/unnecessary spell casting is thus discouraged, and possible enforced in areas where spell casters have influence. Never been a factor in-game, just a background explanation to keep a more medieval feel to my medieval towns and villages.
That works. My in game explanation has always been simply that magic is not technology; magic is more art than science. Magic-users are rare and not wholly accepted among superstitious human societies, just like witches were feared in medieval Europe. The player characters are not like ordinary folk, they are rare exceptions with their powerful spells and magic items -- like heroes of legend. My out of game explanation is that it's a game, not a logical simulation given certain assumptions, and having magic be everywhere and used like technology would change the genre from medieval fantasy to something more like steampunk or the Potterverse.
There can always be exceptions. A city where Pelor is the patron deity may indeed be lit up with continual light posts. There could be a school or guild of magic that has such things. Magic-use is much more acceptable and common among elves, so I can easily imagine them having continual light lanterns of various colors, casting cantrips for everyday tasks, etc.