I've noticed this recently and can't find any clear explanation for it. In certain areas if I approach a house or wall I might notice the 'torch' light effect on the terrain, even if the candles/mounted torches aren't on. If I get close enough, the effect vanishes, and goes back to normal. An example of this is the main gate of Chorrol, or some houses around Bruma.
Is there an ini. setting for this perhaps? Or is it likely mod related?

It's a bug in Liquid Water, check the topic for a replacement fix file.

Does that include OBGE water? Because that's the only water-based mod I'm using.
Edit: Just noticed that's the actual name of it. Well spotted.