I think at the current moment it’s a catch-all term for … game design within a finite space? Or how the game design is applied in a particular scenario/setpiece.
I feel like the term makes the most intuitive sense when it’s applied to the geometry of sidescrolling games. Thinking of how the Mario 3 level designers drew the levels out on graph paper (surely this was done with other games too), hung them on the wall, and then the programmers put them into the game. Since the basic game design is “move to the right and avoid obstacles,” and the enemies damage the player in the same way obstacles like fire do, the enemies are part of the level design.
To contrast this with another 2D game, the enemies in Zelda II aren’t usually part of the level design because the challenge they present is fundamentally different than that presented by the “levels,” which I think of as being the dungeons. There the level design tasks the player with exploring a complex of rooms and hallways until they find the item and then the boss. The enemy encounters are, of course, different than this: Typically they are about avoiding an enemy (an obstacle) that moves in a psychotic zigzag or back-and-forth pattern, probably throwing things at the player, inching Link close enough to hit with the sword, then retreating.
In 3D action/adventure games I think the term should usually be applied to level geometry and enemy placement, but almost never enemy encounters, since enemy encounters in these types of games almost always present a fundamentally different challenge than that of the level geometry. In enemy encounters the movement space usually shifts from being infinite to closed as the player focuses on the enemy, the nature of movement changes, shifting to a strafing or circling motion, player shifts to thinking about how to damage and avoid specific enemy’s attacks, etc. etc. etc.
In 3D platforming games the enemy encounters often present the same challenges as the platforming segments. In Mario 64, the skill required to defeat the eye enemy that shoots bubbles at you and the skill required to run in a circle (on a circular platform) to avoid the rotating flamethrower obstacle are the same. The skill required to jump on a slowly moving Goomba and the skill required to jump on a slowly moving platform are the same. So I think for that genre enemies are part of the level design.
So to grossly oversimplify, I think defining the term should start at level geometry and the placement of items, obstacles and enemies, and then we can expand that definition to include enemy encounters, depending on their nature.
Mods plz don’t ban me Mario is all I know