For your convenience, the dharma means “Ho (objects of the mind or objects of the six sense organs)”, which is one of the six objects of perception or cognition (Rokkyo). See the reference below for the meaning of “法燈=法灯”.
FYR:
◆　ほうとう【法灯】：〔出典：　明鏡国語辞典〕
　①　衆生を迷いから救う仏の教え。◇闇を照らす灯火にたとえていう。
　②　神前・仏前にともす灯火。みあかし。
◆　法燈（ほうとう）：〔Source: Dictionary of Japanese Buddhist Terms〕
　‘Lamp of Dharma’；　the Buddhist teaching which dispels spiritual darkness like a lamp.　

I don't know what sect of Buddhism, or what book is referred to in your quote.
But in general, across all Japanese Buddhist sects, 法燈 means teachings of Budda.

Therefore, one would hand it down to his followers and/or disciples, and the followers and/or disciples succeed and receive such teaching. The former is 法燈伝承, the latter is 法燈継承.
The followers can be priests and other professional practioners, as well as faithful laypeople.

http://plaza.rakuten.co.jp/totteiwakusyokyo/diary/2008102300...、法燈を継承するとは、その仏の教えを
継承するという意味です。

http://blog.goo.ne.jp/tenjin95/e/cc035882c1f2b449b86309dcf75... 法燈継承式というのは入退山式（入退寺式）とも言われ、お寺の住職が交代する式のことを言います。

In Buddhism, three principles are most revered. They are the "Budda", the "Dharma", and the "Sanga".
All these can be 法燈. This is why. The "Budda" is not necessary that historical person whose name was Shakamuni, who lived 2500 years pr so and became a founder of Buddhism, but anyone who dedicates his/her life for observing the teaching of this man.
"Dharma" is his teachings and principles compiled in documents called Sutra.
The "Sanga" is congregation of such followers.
Again all these are 法燈 regardless of sect.

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Note added at 2 hrs (2010-05-11 17:35:06 GMT)
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Literal meaning of 法燈 was explained by Saito-san. But I believe it has much broader allusion and abstract meaning to it as I explained.

法燈とは「心に法の燈を点す」こと。つまり「釈迦が説く法（真理）を学び実践すること」を意味する。
http://puchitabi.jp/yamagata/article/post-23.html

つまり、法燈を継承するとは、その仏の教えを
継承するという意味です。
仏の教えを継承する＝仏の教えを広める人＝お寺の住職
回りくどい言い方をしましたが、住職の継承式です。
http://plaza.rakuten.co.jp/totteiwakusyokyo/diary/2008102300...

法灯 = the light of Buddhism; religious tradition (definition: Nelson's Japanese Character Dictionary)

http://www.amazon.co.uk/Classics-Buddhism-Zen-Transmission-U...

Classics of Buddhism and Zen: "Transmission of Light", "Unlocking the Zen Koan", "Original Face", "Timeless Spring", "Zen Antics", "Record of Things


http://www.angelfire.com/electronic/awakening101/ch42.html

The light that is transmitted is precisely the Buddha wisdom we are born with. Transmission doesn't give us something that is different from or outside of us. It is more a process of discovery, of realizing the inherent perfection that is the life of each one of us.