That is correct, but the game does use it for a lot more than just scripting.

ps: Lua, not LUA -- it's the Portuguese word for moon, not an acronym :)

So we can conclude then that games have many different facets to them and they can be loosely coupled enough that you can implement them using different technologies. The interface could be done in Lua, since it doesn't require intense computations when compared to graphics and physics engines.