As much as it sounds tinfoil-hatty: you cannot trust the indicators.
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For a long time the LED indicators were part of the enable circuit and therefore hardwired to turn on/off on camera "active". These days though... The fact that it's a firmware "feature" already says tons about it.
Ding ding ding. Unless it’s wired in sequence with the camera sensor’s power, it can’t be trusted. If software can control it, software can easily be used to turn it off.
Sorry but I'll have to correct you there. The webcam (even the ones embedded to laptop screen frames) are a mere usb device, using four wires in total: 2 for power and 2 for serial comms. The device doesn't get "powered on or off". There's a controller chip that handles everything, from the simple usb serial comms to image processing. What I was referring to is that, in the past, there was a pin on that chip which would go high indicating the chip was "called", as in it had come out of standby. This pin was not software dependent and could not be changed. Manufacturers would use this enabled pin to control the led (amongst other things) but these days they don't. Mostly because these pins get repurposed depending on the application and so it's cheaper to use software to configure them with new functions instead of having pins that only carry out a single function. In theory is a smarter way to utilise chips in multiple products but by ignoring true customer privacy.
I remember watching this video a while ago, this is why I keep my camera covered when not in use: https://youtu.be/m0mMF7GaIR0
I have the camera plugged into a USB hub where you can turn each port off individually