I'm watching this on the morning of Saint Lucia Day and it really set the mood!
I loved that you actually googled it when you wondered about what Lucia was. Most people I've reacted to never bothered, which I think takes the magic somewhat away from the scene where it's revealed that Sara got to be Lucia. Lucia is also celebrated on the 13th of December each year, so we know we are nearing the holidays on the show.
To answer your question about Lucia from a Norwegian POV, celebrating St. Lucia Day happens locally, mostly in educational institutions or kindergartens. So there is no one nationwide "Lucia", but rather one for each school or company or private group that chooses to celebrate it to this extent. :) For younger children, and probably a lot of adult groups too, all names are usually put on a note and one name is drawn at random. This person would become Lucia, unless they've been Lucia previously in recent years.
I imagine this is a similar practice in Sweden too, but I can't say for certain. Because Young Royals did a different approach where each person had to enter and get voted in order to be chosen as "Lucia". I'm not sure how usual this approach is in Sweden, but Ive never heard of it before. Either way, it is indeed a cute tradition where we eat special Lucia buns, and I can't wait to grab one for lunch! :D