Very small detail but why not use Lambs format

torch.json
{
	"match": {
		"items": [
			"minecraft:torch",
			"minecraft:redstone_torch",
			"minecraft:soul_torch"
		]
	},
	"luminance": {
		"type": "block_self"
	},
	"water_sensitive": true
}

instead of

{
  "item": "minecraft:torch",
  "luminance": "block",
  "water_sensitive": true
}

Only reason is because the mod im making reads these files and i rather not parse multiple schemas.
I’ve put in the workarounds for now tho but also
i could be doing something wrong but when i added a dirt block for testing in your format it didnt emit light.

{
  "item": "minecraft:dirt",
  "luminance": "15",
  "water_sensitive": true
}

but i know your mod did load it correctly because it didnt throw a warning in the console like it did for my other files

[LambDynLights] Failed to parse item light source "murk:dynamiclights/item/torch", invalid format: missing required fields.

forgot to mention im on Fabric 1.20.1