The neon indicator bulb is used as an indicator on mains voltage appliances. This means that they indicate that the power is on. You might have seen switches that light up when turned on, these contain a neon bulb.

As the name suggests the neon bulb contains neon gas, This gas starts to glow with an orange light when the voltage on the electrodes rises above a certain value (usually between 100 V - 150 V). The neon bulb is used in series with a resistor to limit the current flow through it. In such a circuit the voltage over the bulb will be relatively constant. Due to this the neon bulb is some times used as a voltage stabilizer.