To walk in the light: is to live in such a way that one is enlightened by the truth of who God is.
The enemy rules in darkness (ignorance). He has no power in the light of truth.
Fellowship with one another: When a Kingdom citizen's conduct reflects God's moral character, then real fellowship is possible with other citizens. But it may be that one another refers to fellowship with God rather than fellowship with other believers. Our fellowship with the Father is dependent on walking in His light, where sin is revealed.
Cleanses us from all sin: This revelation enables us to see our sins and bring us to Jesus to seek salvation. Only the blood of Jesus Christ can cleanse us from all sin, making it possible for imperfect believers to have fellowship with a Holy God.