That's pretty cool.
Looks like they have a checkerboard like pattern on the lens/cap.
Yes, they're diffused somewhat. They were designed to plug into a mating socket on the end of a card in telco switchgear as an indicator for something that was happening on the card itself.
There were others that didn't have the cap, and smaller ones that were used as indicators on cards and in consumer telephones. The Merilin II system had a lot of the smaller red/green units. They typically came in Red, Yellowish-Orange, and Greenish-Yellow. I've seen a few other colors, but they're kind of rare.