Level design is communication. The constructed space itself needs to communicate the player's options-- where they can go, what they can do, how to progress. If the space doesn't adequately convey useful information, the player is lost.
Some games have less of this sort of information to convey than others. The player can assume that in a very linear, tunnel-like game, continuing to move forward is always the way to progress. As long as the designer communicates which way is forward (which door the player must exit through to continue) then the player will not be lost. On the other end of the scale are open-world games. The designer must clearly landmark destinations in the world, and the mini-map can be relied upon to lead the player there.
What about a game that lies more in the middle, like BioShock? Open-construction levels that the player can freely navigate, but that are made up of smaller, enclosed individual spaces result in a sort of ant farm arrangement. How does the designer keep the player oriented, and give them the information they need to easily navigate from one side of the level to the other?
These are my personal observations having spent a lot of time examining the levels from BioShock, and not any kind official process or information. These points mostly refer to the core systemic levels of BioShock: Medical Pavilion, Neptune's Bounty, Arcadia/Farmer's Market, Fort Frolic, Hephaestus, Olympus Heights/Apollo Square, and Point Prometheus.
Hubs & spokes
The most common high-level organizational strategy is the hub and spoke-- a large, central space from which smaller, self-contained spaces radiate. A straightforward example of this is the Medical Pavilion hub. You'll remember it as the place you first find the work of Dr. Steinman, and fight your first Big Daddy. The pavilion itself is large and open, with exits to the dental wing, surgery wing, funeral parlor, and so forth split off of it to all sides. However, the space is large enough to be partitioned throughout so that only a couple of possible exits can be seen by the player at any given time, as not to overwhelm them with too many simultaneous options.
As the player passes through the hub, they choose one possible exit and explore the space beyond it. Once this spoke has been explored, the pavilion acts as a reorienting space-- the player may think "alright, I'm done with this area. How do I get to the other parts of the level?" They backtrack through the spoke arriving back at the pavilion, which is easily identifiable. At this point the player only has to walk around the outer edge of the hub space to find exits to the rest of the possible spokes.
In this arrangement, minor spaces are always closer to major spaces than they are to other minor spaces-- the player always passes through the hub to get to another spoke. The player never proceeds directly from spoke to spoke, getting lost without an identifiable anchor space to reorient themselves by. The terminal point of any small explorable space is always just a short lifeline away from the major anchor space.
Consider this in contrast to an even distribution of small spaces that are all interconnected: if the player is on the far side of the level and wants to return to the place they started, they must pass through a succession of small, evenly-weighted spaces to return there. How does the player know whether they're making progress? How do they keep from getting turned around? The player must essentially memorize how each spoke is connected to every other. Even distribution of space results in a labrynthine construction that works against the player's sense of direction. Hub and spoke construction guarantees that even if the player is wandering blindly they will soon arrive at a large, recognizable space they've seen at least once before, and can reset their navigation from there.
Of course, this all goes back to principles of design for real-world public spaces. A shopping mall is laid out in this way-- short hallways branch off of a central concourse so that the visitor is never far from a large, central space that connects back to all the other minor spaces radiating from it. In BioShock, this is may be most recognizable in Fort Frolic, a large shopping mall in Rapture. Two main concourses are connected by a single passthrough, and all the shops, theatres and attractions branch off of these two major anchor spaces. When the player arrives at a dead end while exploring the tobacco shop for instance, they need only wander back the way they came until they reach the central atrium, from which they are reoriented and all their other options are open-- the Fleet Hall theatre, the casino, the strip club, etc. In Hephaestus it's the circular walkways ringing Hephaestus Core; in Apollo Square it's the large central courtyard containing the gallows, and so on.
The player's comprehension of an open-construction level is like a lifeline trailing behind them. If there's no central reorienting space, the player has nothing to anchor their line to; if the minor spaces radiating out from the anchor are too convoluted or arbitrarily interconnected, the player's lifeline gets tangled and they have no idea how to get back to their anchor point. A successful open-construction level is one where the player can be confident that their lifeline will always lead them back 'home,' from which they can cast out again, safe to explore new territory without being left adrift.
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Level design is communication. The constructed space itself needs to communicate the player's options-- where they can go, what they can do, how to progress. If the space doesn't adequately convey useful information, the player is lost.
