You can think of it as 'reality' or 'to see things as they really are' Here they are saying basically, when work is done late at night when someone is tired, when they look at it again the next day, when they are awake and alert, they can see that it is bad work. Sarah thought the man was so good looking when she was drunk that night in the club, but when she awoke the next morning and looked at him in the cold light of day, she soon realised what a terrible mistake she had made.