Styrofoam is usually 1.0 pounds per cubic foot. It has a flame spread rating that is considered too high to be left uncovered. It will not burn unless the flame is supported by other material, but it will burn under those conditions.
The moldings you see are made from recycled styrene material and are a much higher density, thus a lower flame spread. They are usually used in lesser amounts also. Please, they are different materials.
You asked for advice. I've been working with foam plastics for 37 years (packaging, building products, aircraft products, pharmaceutical products) so I have some idea what I'm talking about. I'd not do what you propose in my house and I advise against doing it in yours. No recessed lighting in foam.