This is something that I had to deal, to understand better, over time. Some posts on forums are made by students of architecture who have difficulty designing a level and they may even have the degree in architecture. It would seem that people with a background in architecture would have a much easier time designing a level, wouldn't they? That's a false assumption that I came to realise over time. When one thinks about a home, what are the concerns about that home? I have no background in architecture or arts so you may take what I say with a grain of salt. The first concern is building a home which suits whoever is going to live there. That home is going to be a long term construction where one or more people are going to spend a huge part of their lives. A real world construction has concrete properties such as costs, space and location. And abstract and subjective properties such as comfort, dreams, feelings and emotions. A game's environment on the other hand doesn't exist in our world. It exists in a virtual world where some rules do not apply, such as obeying to real world engineering parameters that every construction in our world has to obey to.
I remember that Max Payne is one of the games that made me realise that games that rely on real world places such as Max Payne itself don't have to obey to our world's logic. Say that we want a home with two bedrooms, one kitchen, one living room, two bathrooms, one basement, one entrance door, one back door and maybe a cellar to store wine bottles. In the real world we are probably going to have one door to enter a bedroom and the same door to exit it. In a game world, however, we can have hidden doors for example. The walls and doors don't have to be arranged in the same way that they'd be in the real world. The gameplay comes first. If we are building a house in some first person shooter game, it can have an architecture that obeys to some or most of all rules of our world, but it has to serve a purpose in the game. The game has its own world, own laws and rules and they may or may not be exactly the same laws and rules of our world. In the case of a third person shooter we are forced to have a much higher ceiling because the camera wouldn't fit otherwise. The scale of things in a game mismatches that of our world because the game is not a perfect real world simulator, or at least that's not what I think that a game should be.
There is one key which is leaving room for the players to imagine. We don't have to show everything which is inside each building for example. The scale itself may not be a perfect match for reality. In Max Payne for instance. Buildings feel and look realistic, but whoever built them wasn't concerned about every pipe, cable and every floor of it. More often than not, a level represents one or two floors of a building, while the rest are never shown and never visited. They don't even exist within the game's world. If we were building an exact replica of a real world construction we would have to think on real life parameters, but within a game world all those real life parameters can be skipped. I think I read about this from Kevin Levine and J.K. Rowling about leaving room for the reader to fill in the gaps with their own imagination. I'm not a writer and can't offer advice here on how much to design and how much to imply.
I wish I could extend this discussion to philosophical terms, such as Abstract vs Concrete. Unfortunately I don't have such wisdom and it would be too much for this page. There is a concept called "verismilitude" in philosophy, which basically means that something is similar to the truth. For the purposes of a game we can work with an easier word "believability" or "credibility". Which means that the game presents something in a believable or credible way. Our minds are able to recognize common shapes, colors, objects, humanoid shapes, etc and relying on this is what allows a level to be designed such that while it's not a replica of a real world location, it feels believable enough for us to not focus on the questions "How can an enemy be there if that room up there has no way in or out?" or "Is it right to have this here and not there?". Below I'm giving some practical examples of level design which blends in fiction with reality, presenting an environment that while may not be feasible in our world, serves its purpose within the game's world.
The last part of Max Payne 3 takes place in an airport. The first combat takes place inside the zone where passenger's baggages are scanned and sorted. The conveyour belt there, the suspended walkways and the many baggages and airport baggage carts form a maze like place. In the real world it'd be much cleaner and brighter than it is in the game. Next, the player progresses through some service area with offices and ends in a bathroom, which leads to another terminal in the same airport. What airport in the world has a bathroom with one backdoor that leads to a private area, highgly secured, where passengers would never be allowed into? It doesn't exist in the real world.
In this part of Max Payne 2 the player investigates a luxury apartment building. In a real world building the apartments in each floor share the same area, unless the building's structure has larger and smaller apartments. When a building has a structure with apartments that all share the same total area we have a symmetry from the bottom to the uppermost apartment. We expect walls, pillars and each room to have the same position in each floor. That's not the case in Max Payne 2. The player jumps over some balconies but they aren't symmetrical in respect to different apartments from different floors. The player can notice that below and above there aren't other apartments with more balconies. The level wasn't made with symmetry in mind.
Control for example. If you think "Why would I place a table here? Why would the offices be placed here and not there, very far away from the main elevator? Why is the director's office connected to this corridor and this other corridor?". Those questions would make more sense in a real world building. However, we are in Control's own world. We don't have real persons working there. We have real players exploring an environment. We have AI controlled enemies and NPCs which do not have sentience or self awareness to the point of feeling anything or discussing anything about that world.
Cairn Reactor in Jedi Knight 2. From a real world standpoint this level isn't what the inside of a nuclear power plant would be. We would have rooms specific for monitoring temperature and other data. Bathrooms, storage rooms for nuclear waste, etc. We would never have corridors with deadly lasers that fire at regular times. Again, we are in the Jedi Knight game's world which operates in a game world logic. We aren't thinking on a real world building which wouldn't have obstacles to be traversed. Much less puzzles to be solved or secret areas to discover. The environment does feel hazardous as in a real world nuclear power plant, but at the same time it's designed around gameplay. Not around having to be an exact copy of a real world location.
In Halo: Combat Evolved, at the end of the game the player drives a vehicle inside the spaceship. The level was designed to be a racing track with obstacles along the way. Completely disregarding the ship's exterior. From the perspective of a grown up designer this is ilogical. However, from the perspective of the players at the time, it was fun. What I'm trying to say is that very often we have choices to be made and, sometimes, sticking to fantasy over reality is deliberate. I don't think there is an exact boundary between fantasy and reality and the worst thing that I'd find myself doing is to stick to one or the other in a religious sense, rejecting any other point of view that isn't that which I'm obeying to.
Rules do exist for a reason, but that doesn't mean that we can never question them.