How do neon and other noble gases produce light?

Neon and other noble gasses produce light the same way any other substances produce light. An electron in the outer shell becomes excited and jumps to a higher energy level in a higher shell. When it falls back to the outer shell, it gives off a photon of light. The mercury in florescent bulbs works the same way. Lasers work the same way. Neon and other noble gasses are used in so many applications because they do not react with the electrodes at the ends of the tubes. The noble gasses are inert. The mercury in florescent tubes or the sodium in sodium vapor lamps can react with the electrodes at the end of the tubes. This can make those lamps wear out much faster than neon lights.