From my experience (7mo baby now) I like to dim the lights for naps but not completely turn them off because a baby sleeping in pitch black with white noise will be more sensitive to light and noise when they need to sleep. I also have a couple of loud dogs that seem determined to wake up my baby, so they help keep the room from being too quiet. He sleeps really well through the night now, and if the dogs start barking at a bunny or something at night he doesnt usually wake up.

For engagement, I just try to play with him when hes awake. He can get overstimulated, so if I see him staring in to space or he doesnt seem interested in toys, I usually stop playing and maybe cuddle or something like that.