attempt on a simple dynamic lights implementation. Not tested on servers, but should work fine for SinglePlayer.

DynLight.java

package com.github.glasspane.dynlight;

import net.fabricmc.fabric.api.tag.TagRegistry;
import net.minecraft.entity.player.PlayerEntity;
import net.minecraft.item.Item;
import net.minecraft.tag.Tag;
import net.minecraft.util.Identifier;
import net.minecraft.util.math.BlockPos;

import java.util.stream.StreamSupport;

/**
 * @author UpcraftLP
 */
public class DynLight {

    public static final String MODID = "dynlight";
    public static final int TORCH_LIGHT_LEVEL = 14;
    private static final Tag<Item> Light_SOURCES = TagRegistry.item(new Identifier(MODID, "light_sources"));

    public static boolean checkDistance(PlayerEntity player, BlockPos pos) {
        return pos.equals(player.getBlockPos()) && isHoldingLightSource(player);
    }

    public static boolean isHoldingLightSource(PlayerEntity player) {
        return StreamSupport.stream(player.getItemsHand().spliterator(), false).anyMatch(itemStack -> itemStack.getItem().isIn(Light_SOURCES));
    }
}

light_sources.json

{
    "replace": false,
    "values": [
        "minecraft:beacon",
        "minecraft:campfire",
        "minecraft:end_rod",
        "minecraft:glowstone",
        "minecraft:jack_o_lantern",
        "minecraft:lantern",
        "minecraft:lava_bucket",
        "minecraft:torch"
    ]
}

MixinClientPlayerEntity.java

package com.github.glasspane.dynlight.mixin;

import com.github.glasspane.dynlight.DynLight;
import com.mojang.authlib.GameProfile;
import net.minecraft.client.MinecraftClient;
import net.minecraft.client.network.AbstractClientPlayerEntity;
import net.minecraft.client.network.ClientPlayNetworkHandler;
import net.minecraft.client.network.ClientPlayerEntity;
import net.minecraft.client.recipe.book.ClientRecipeBook;
import net.minecraft.client.util.ClientPlayerTickable;
import net.minecraft.client.world.ClientWorld;
import net.minecraft.stat.StatHandler;
import net.minecraft.util.math.BlockPos;
import org.spongepowered.asm.mixin.Final;
import org.spongepowered.asm.mixin.Mixin;
import org.spongepowered.asm.mixin.Shadow;
import org.spongepowered.asm.mixin.injection.At;
import org.spongepowered.asm.mixin.injection.Inject;
import org.spongepowered.asm.mixin.injection.callback.CallbackInfo;

import java.util.List;

/**
 * @author UpcraftLP
 */
@Mixin(ClientPlayerEntity.class)
public class MixinClientPlayerEntity extends AbstractClientPlayerEntity {

    @Shadow
    @Final
    private List<ClientPlayerTickable> tickables;
    private boolean dynlight_wasHoldingLastTick = false;

    public MixinClientPlayerEntity(ClientWorld world, GameProfile gameProfile) {
        super(world, gameProfile);
    }

    @Inject(method = "<init>", at = @At("RETURN"))
    private void construct(MinecraftClient client, ClientWorld world, ClientPlayNetworkHandler networkHandler, StatHandler statHandler, ClientRecipeBook recipeBook, CallbackInfo ci) {
        this.tickables.add(() -> {
            boolean hasLight = DynLight.isHoldingLightSource(this);
            if(hasLight || dynlight_wasHoldingLastTick) { //only queue light updates if we are actually holding a light source
                this.world.getProfiler().push("queueCheckLight");
                BlockPos.iterate(this.getBlockPos().add(-1, -1, -1), this.getBlockPos().add(1, 2, 1)).forEach(this.world.getChunkManager().getLightingProvider()::enqueueLightUpdate);
                this.world.getProfiler().pop();
                dynlight_wasHoldingLastTick = hasLight;
            }
        });
    }
}

mixins.dynlight.json

{
    "required": true,
    "minVersion": "0.7.11",
    "package": "com.github.glasspane.dynlight.mixin",
    "compatibilityLevel": "JAVA_8",
    "client": [
        "MixinClientPlayerEntity",
        "MixinServerLightingProvider",
        "MixinWorldChunk"
    ],
    "injectors": {
        "defaultRequire": 1
    }
}

MixinServerLightingProvider.java

package com.github.glasspane.dynlight.mixin;

import com.github.glasspane.dynlight.DynLight;
import net.minecraft.client.MinecraftClient;
import net.minecraft.server.world.ServerLightingProvider;
import net.minecraft.util.math.BlockPos;
import net.minecraft.world.chunk.ChunkProvider;
import net.minecraft.world.chunk.light.LightingProvider;
import org.spongepowered.asm.mixin.Mixin;
import org.spongepowered.asm.mixin.injection.At;
import org.spongepowered.asm.mixin.injection.ModifyArg;

/**
 * @author UpcraftLP
 */
@Mixin(ServerLightingProvider.class)
public abstract class MixinServerLightingProvider extends LightingProvider {

    public MixinServerLightingProvider(ChunkProvider chunkProvider_1, boolean boolean_1, boolean boolean_2) {
        super(chunkProvider_1, boolean_1, boolean_2);
    }

    @SuppressWarnings("UnresolvedMixinReference")
    @ModifyArg(method = "method_14275", at = @At(value = "INVOKE", target = "Lnet/minecraft/world/chunk/light/LightingProvider;method_15560(Lnet/minecraft/util/math/BlockPos;I)V"))
    private int getLuminance(BlockPos pos, int luminanceIn) {
        if(DynLight.checkDistance(MinecraftClient.getInstance().player, pos)) {
            return DynLight.TORCH_LIGHT_LEVEL;
        }
        return luminanceIn;
    }
}

MixinWorldChunk.java

package com.github.glasspane.dynlight.mixin;

import com.github.glasspane.dynlight.DynLight;
import net.minecraft.block.BlockState;
import net.minecraft.client.MinecraftClient;
import net.minecraft.entity.player.PlayerEntity;
import net.minecraft.util.math.BlockPos;
import net.minecraft.world.chunk.Chunk;
import net.minecraft.world.chunk.WorldChunk;
import org.spongepowered.asm.mixin.Mixin;
import org.spongepowered.asm.mixin.Shadow;
import org.spongepowered.asm.mixin.injection.At;
import org.spongepowered.asm.mixin.injection.ModifyArg;

import java.util.function.Predicate;

/**
 * @author UpcraftLP
 */
@Mixin(WorldChunk.class)
public abstract class MixinWorldChunk implements Chunk {

    @ModifyArg(method = "getLightSourcesStream", at = @At(value = "INVOKE", target = "Ljava/util/stream/Stream;filter(Ljava/util/function/Predicate;)Ljava/util/stream/Stream;"))
    private Predicate<BlockPos> getLightSources(Predicate<BlockPos> predicate) {
        PlayerEntity player = MinecraftClient.getInstance().player;
        return predicate.or(pos -> DynLight.checkDistance(player, pos));
    }    @Shadow
    public abstract BlockState getBlockState(BlockPos blockPos_1);



    @Override
    public int getLuminance(BlockPos pos) {
        return DynLight.checkDistance(MinecraftClient.getInstance().player, pos) ? DynLight.TORCH_LIGHT_LEVEL : this.getBlockState(pos).getLuminance();
    }
}