Lua. What is it yand why?

To see a good usage of LUA: WoW AddOns are all LUA ... the stuff added there should give you some idea of what potentially is possible.

Or directly checking out Nebula / Nebula 2 Engine ... full 3d engine scriptable through lua.

so in the end, with usefull functions you give it, there is theoretically nothing you can't do :-)