How do alternating Christmas tree lights work?
These kinds of lights have LEDs connected in an alternating polarity fashion. Take look at the following circuit.







simulate this circuit &ndash; Schematic created using CircuitLab

Lights with this kind of configuration are cheaper to make and adequately serve their purpose.

The controller is able to power the LEDs in the following two ways to create the effect:


P1 (HIGH), P2 (LOW)... all even LEDs are on.
P1 (LOW), P2 (HIGH)... all odd LEDs are on.
AC ... all LEDs on (actually just alternating too fast to see)