It's tricky and if it was a one off I'd have let it go because it's something you don't mind, but with the history of them treating you with disrespect, they've created a situation where your DH didn't really have much choice in a way. Letting it go means accepting disrespect and neither he nor you should be doing that, especially when it's a pattern. They knew darn well it was disrespectful hence FIL looking sheepish and MIL trying to brazen it out and make out you're the weird one for being shocked. You're not. They've so obviously come over hoping you'd be out and they could do it unchallenged.
It's not the putting up lights that's the problem (although it would be if you then had the effort of taking them back down again, and while you're ill too, if you didn't want lights), it's the disrespect that's the real problem. Feeling confused etc is because they're gaslighting you. You know they're in the wrong but they're making you doubt yourself by openly or covertly saying/acting like you're the one in the wrong. It's not wrong to expect to have control over your own home and life.
Not wanting to be told no isn't a reason for them to go behind your back with anything. You've every right to say no and they shouldn't be taking that option away from you. What they want isn't more important than what you want, especially when it relates to your home, your family yourself and your life.
Your DH had your back and there wasn't really any way he could do that without telling them to stop. Anything less would not have been seen by them as you two standing up to them, but as them getting their own way and you two tolerating it.
They're unreasonable people, trying to reason with them about their bad behaviour isn't going to work. Asking someone who doesn't respect you, to please respect you, doesn't work. They're not going to listen because they're not respectful people!
The message has to be sent by your actions, which means stamping on anything remotely disrespectful. That's the only way they'll stop acting like this. They still won't respect you but their behaviour might change if you give them solid consequences for their actions. In this case, they wanted to put lights up, they acted disrespectfully = no lights. Or you put your own up.
When they've acted like this, you can't let them carry on, you'd be sending them the message it's ok if they disrespect you. They're like toddlers who need it made crystal clear that disrespecting you isn't an option and will never be allowed.
They're literally emotionally/psychologically stunted in their development and can't be treated like normal adults. This doesn't mean it isn't their fault, it very much is. They're not so stunted that they don't know what they're doing is wrong and even if they were, you still don't have to put up with it! They're manipulative and that takes both effort, the intelligence enough to be so sly and a desire to manipulate someone. It's really nasty, however much they smile while they're doing it. Watch your back, because they're they type to metaphorically stick a dagger in it when you're not looking. They might be your in-laws but they aren't your friends.