I'm working on this as my project for a yeshiva program, and I'd like some input
What does the concept actually mean? It's only mentioned briefly in most of our scripture and commentary.
Are there any sources you can use to back up your view?
Yeshaya Leibowitz, in his book "Judaism, Human Value, and the Jewish State", adamantly argues that the phrase "light unto nations" as used in Tanach (in Isaiah) is referring to the prophet Isaiah himself, and not to the nation of Jews. It is the prophet who is supposed to be the light unto nations. He claims this original usage was changed by the early Zionists for political reasons. The Jewish people, on the other hand, are supposed to be a "nation of priests" who serve the other nations in a teaching or ministerial role.
When we bring the light of Torah into the world, then we are a light unto the nations.
By practising Judaism and being generally good (honest in business, no lashon hara (slanderous speech)), you become a role model that others will aspire to become. Non Jews will see your ways, and see that they are good and will copy some of your traits. By being a light (a flame) unto the nations, you provide the flame to those around you, they in turn become a light to spread. Even though you have given your light away, it still shines as bright as ever, if not brighter, as it is at no cost to you.
This brings us onto dugma (leading by example.) While one can talk about being a light, this cannot compare to actually being a light, so while it's all very good saying to a gentile be honest in business, the light is only there if you yourself are honest in business.
"... Don't walk behind me, I may not lead. Just walk besides me and be my friend and together we shall walk in the path of hashem."
We can become a light unto the nations by reflecting Hashem's wisdom in the world. We model Chochmas Hashem when we follow the Torah properly. I believe the source for this is a Pasuk in the Torah in Parshas Va'eschanan, chapter 4, verse 6:
ו) וּשְׁמַרְתֶּם וַעֲשִׂיתֶם כִּי הִוא חָכְמַתְכֶם וּבִינַתְכֶם לְעֵינֵי הָעַמִּים אֲשֶׁר יִשְׁמְעוּן אֵת כָּל הַחֻקִּים הָאֵלֶּה וְאָמְרוּ רַק עַם חָכָם וְנָבוֹן הַגּוֹי הַגָּדוֹל הַזֶּה
You shall keep and perform them because they are your wisdom and understanding in the eyes of the nations, who shall hear all these decrees an will say "What a wise and understanding people is this great nation".
As an aside, it would seem the barometer of when we are keeping the Torah properly is when the other nations will look to us and say what a wise and intelligent nation we are. The people will see the tremendous wisdom in the system of Mitzvot. Only then will we be truly keeping the system properly.
Some of Levinas' writings explicitly relating to the Talmud might seem appropriate here. I'm certainly not expert enough to comment on the Talmud aspects, so I have tried to simply compile a few passages from Beyond the Verse that might seem relevant to your concern here. From "Model of the West," which elaborates Tractate Menahoth 99b-100a:
Faced with the 'historical meaning' which dominates modernity, the meaning of becoming which, for the Westerner, certainly carries the real to its conclusion, but a conclusion which is unceasingly deferred in the false Messianisms of modern times (times, however, which are defined as times of conclusions); faced with the 'historical meaning;' which thus calls into question, relativizes and devalues every moment or which, foreseeing a supra-temporal eternity of ideal, yet, in reality, incomparable relations, is capable of a mathematically perfect science in a badly made or un-made world; faced with all this historicism, does not Israel attach itself to an 'always' -- in other words, to a permanence in time, to a time held by moments of holiness, by the way in which they have a meaning or are 'so close to the goal' -- and where not one of these moments is lost, or to be lost, but they are all to be deepened, that is to say, sublimated? And instead of remaining word, a purely theoretical view or doctrinal affirmation, or some sort of coexistence of moments of time passing, do not this predilection and this signification of the always call for a whole structuring of concrete human reality, and a whole orientation of social and intellectual life -- perhaps justice itself -- which would render only such a signification possible and significant? (Levinas, Beyond the Verse 17-18)
A few pages later, he has worked his way back around to this theme:
The Jew, like the Westerner, is certainly without any illusion as to the 'relativity of certain values', but he makes a distinction precisely between values and holiness. The permanence of Israel is in this awareness of holiness which is exalted and in this possibility of judging history; this 'eternity' of Israel is not a privilege but a human possibility, and it is not unimportant that this temporality of holiness, this holiness as life, is said not in connection with some ethereal spirituality, with what is called in discourses 'spirit', but on the occasion of the bread of men. (Levinas, Beyond the Verse 21)
This may all seem a little dense. Sarah Hammerschlag, in The Figural Jew, may help contextualize some of these remarks -- this is in fact in the context of a broad presentation of Derrida's reading of Levinas, but I think it is apposite nevertheless, and explicitly connects some of the themes Levinas is discussing above with the phrase you are asking after:
The name Sinai signals the tension in Levinas's writing among his insistence on the ethical relation as a purely philosophical structure, his repeated claims that Judaism is the historical bearer of its message, and his insistence that, as the capital of the very real state of Israel, the earthly Jerusalem is that place "which will have to incarnate the prophetic moral code and the idea of its peace."
The dynamic inaugurated by this tension would seem... to point to the dangers of exemplarity. Once Levinas locates Judaism as the site of election, as the historical bearer of the ethical tradition, then it appears that Israel would have to be singled out as the privileged site of its enactment. Israel, according to Levinas, has a vocation to enact a prophetic politics. On the one hand, this vocation requires that we judge Israel by a more stringent standard, one that demands Israel transcend the status of being "a state like any other." On the other hand, this claim rearticulates the messianic rhetoric of Isa. 42:6, which declares the Jerusalem shall be "a light to the nations." Israel, Levinas suggests, is "impregnated" with a mission necessary for our world, to create the city envisioned in Psalm 48, "the joy of the whole earth," "the city of our God." (Sarah Hammerschlag, The Figural Jew 249)