How was Bilbo able to see in the darkness?

Bilbo used the dagger he received from the trolls to light his way.

Now he drew it out. It shone pale and dim before his eyes. "So it is an elvish blade, too," he thought; "and goblins are not very near, and yet not far enough."

But somehow he was comforted. It was rather splendid to be wearing a blade made in Gondolin for the goblin-wars of which so many songs had sung; and also he had noticed that such weapons made a great impression on goblins that came upon them suddenly.

"Go back?" he thought. "No good at all! Go sideways? Impossible! Go forward? Only thing to do! On we go!" So up he got, and trotted along with his little sword held in front of him and one hand feeling the wall, and his heart all of a patter and a pitter.