There is no rule such that the bathroom lighting should be provided only in the ceiling or is better if it is provided at the sides or on top of the mirror. One has to fix the bathroom lightings according to one's taste and the mood that he or she wants to bring into the room. Even for a small bathroom, people, these days, go for two or more lighting fixtures. Thus, lighting is the most important factor to be considered in any modern bathrooms.
It is wise to use flush-mounted ceiling fixtures, owing to the fact that these come with bulbs that are enclosed by a kind of cover. The cover is essential as it acts somewhat like a lamp shade and helps in diffusing the light as well as protecting hot bulbs from breaking and cracking from contact with water vapor. The best would be to have the right balance of ambient bathroom lighting and task bathroom lighting. This will give your bathroom proper illumination and make your bathroom experience worthwhile.
Ambient lighting: This sort of lighting covers the general bathroom space. You could have a centrally fitted light - a chandelier, for example, if you want to opt for a special and creative effect - or several bright lights fitted all along the walls. If you are planning on installing recessed lights, be sure you install several recessed light fixtures or use recessed lights in combination with other styles of lights. Just a few recessed lights will not do the trick. Be sure you use glass lens over the recessed lights; plastic turns yellow with time.
Bathroom Lighting: Of all the rooms in your home, the bathroom specially need to be a well-lit area. Many people seem to forget about this details when designing their houses; in the end, you don't devote most of your day inside bathing room, so why go to all the expense? Well, if perhaps you don't want to, but a well-lit bathroom has its emotional advantages and it helps physically too to be able to see clearly and walk safely and securely in the bathroom.