XML is a great way of doing it, and the XML can refer to lua files where needed. (IE: a game object that does some action).

you can use Lua to parse your XML level file and create the level that way. IMO the scripting interface should be the only place where you create your level.

To try to explain this better...
You are already using XML to load a level. The XML file is describing the physical state of the level. It has all the objects that you need to load, and any information that goes with it. But it is static data that does nothing.

You would add ontop of this a layer of Lua, or any other scripting language to represent the dynamic states of the game objects.
You could have scripts that represent the Update() for your enemy. The script contains all the runtime code to decide what actions the enemy should take.
You could have scripts that describe effects, like multiple part explosions that spawn debris and then set a game flag like "passage open".

Lua lets you move logic out of your game code and into script code. Scripted code is better for iteration time, since you can edit the scripts on the fly instead of having to recompile and restart your game to see the changes. While a small project may have a really short recompile->restart cycle, even a 30sec cycle feels slow compared to being able to edit something and see the changes the moment you hit "save".

If you were going to use lua as your data definition language, then you could do things like use a function to return a property for an entIty. This function could use math.random to vary the entity every time it is loaded. You can't do that with XML as easily. Also, lua is less verbose that XML for data definitions. Just my 2 cents.

Cheers,

Bob

I guess this is more particular depending on your current setup, but. If your game engine has a Lua API, meaning you can create game objects and and receive events from your engine IN Lua, then you can do a lot more than just define what a level should look like.

XML is universal in the sense that it is brain dead simple to parse both from C# or Lua (using LuaXML). C# allows you to build XML visually using winforms or WPF, so if you REALLY want to talk level design, you could write an editor that generates xml and feeds it to your Lua API, which would then construct not just your level, but your game logic and game rules as well. You COULD define your level in lua, but its much harder to automate such a thing than it would be to automate generating the xml. make sense?

You can compare it to coding your game logic in c++ vs lua. Xml is more powerful like c++, it is "type-safe" , you can use XSD to define structures, you can use XSLT to transform etc.. On the other hand lua is more simple and much easier to use.

In my game I use XML to save "engine" data and lua to save level data. To load lua levels is by far more easier than doing the same thing with xml. Simple example:


A simple level file could look like: