It's basically the simplest non-painful-to-work-with programming language that doesn't have a lispy syntax. This makes it very useful for app scripting and programming language experimentation. (And other use cases where you want a dead simple language, but are for some reason averse to parentheses)
Also, Lua's C API for interfacing Lua and C is very pleasant to work with. I did not really get why Lua was so popular until I used it as a scripting/extension language in a small toy project. That was an eye-opener!
