Note that the only thing I disagree from your posts here right now is your notion as to what can and cannot be inferred from the RAW as you demonstrated it in your last few posts.
As for your reasoning about a magic-using nation, I perfectly agree. One of the first TSR products to hold my fancy was
The Principalities of Glantri, which had magically illuminated streets, water-elemental driven gondolas and moving services that offerd everything from flying carpets to teleportation.

Of course, it also was a magocracy.
On the other hand, it also had regions were magic was either a tightly controlled financial commodity (Darokin) or a mysterious and rare force (Karameikos). All variants are easily explained by human nature. In one area, magic is the ruling force, and wizards display their power by deploying it to make their lands more to their liking, and safer. In another, only one organization holds the key to that power, and controls all influx of it from outside, setting the prices and the rarity of it. In the next, magic is hard to come by, and those who try to pursue it have a hard time finding a teacher and overcoming the superstitious reactions of their fellow people. And in those worlds that have no easy transportation, where you have to walk for weeks before you might find somebody to teach you magic, fewer will take that ordeal on their shoulders, and not "take a level of wizard on a whim".
And no matter that a low-level wizard can throw a few magic missiles, as long as he can't fly, teleport, turn invisible or throw mass destruction around, a superstitious mob will get him if they think they have to.
About clerics...the fact that not all clerics might simply go and illuminate a city for a secular ruler has been brought up already, even for a tract of land of a generous donation. They might need the spell power for something more important, like healing or blessing, they might not agree with the king that squandering their god's gifts on small alleys is a worthy deed, and might get reprimanded by their deity for doing so (remember, in most D&D worlds, gods make their displeasure pretty imminent, in contrast to the real world), or they simply do not care (neutral churches who don't give a rat's behind about illuminated streets).
And yep, it only takes one 3rd level cleric whose life quest it is to illuminate the cities...and 5 years later, you get another crazy cleric who runs around dispelling or cancelling them lights with his god's blessings. As a secular ruler, I'd not be sure if I wanted lights in my city that can be snuffed out on a god's whim as easily as that.
