The light bar on the DualShock 4 will identify the players. The color/player relation will always be the same. Player 1 will always be blue, Player 2 red, Player 3 green, and Player 4 pink. Also, the light bar on the controller will display health, muzzle flashes from guns and the like.
You can see that the PlayStation 4 has a lot of nifty features that only add to the awesomeness level that the PS4 has attained. We can only begin to comprehend what a revolution the PS4 will usher in.