Yes camo would be excellent! As it is now we have only a few options like the new Aquilonian Ramps to try and blend out the sharp edges of our cliff dwellings! 
The main problem is the game-based limitation of the actual rendering of the campfires, so I try to work around that. Whenever I build my permabase in PVP, I slap down my bedroll and campfire quite a bit distant from my build site. And I never run a campfire anywhere near nightfall.
I do agree the buildings should stop more light from escaping. You can see how holey T1 is, but you’d think things would tighten up in Tier 3, right? One benefit: build at the base of a waterfall, and if you do it correctly the light effect from a Protected Torch inside your building is magical.