There is a physical indicator LED for the camera. The LED indicator can't be seen if the camera isn't in use. Try launching Photo Booth and you'll see the LED indicator.

But, the latest Macs don't have a LED for the mic, which is a disappointment. Good old MacBooks had a LED indicator for the mic.

EDIT: sorry, my memory failed me. The old MacBooks didn't have a LED for the mic. On white plastic MacBooks (2006), there's two black dots around the camera. The dot on the right side is a LED for the camera. The dot on the left side is the mic, not the LED indicator for it. Thanks for correcting me!