Lua is great for scripting with a low footprint, but still definitely requires some code and RAM space - not a fit for very small MCUs. Also, "embedded" Lua almost always requires not using Lua tables (as these are allocated dynamically and can be quite "hungry" in terms of RAM), and frankly, to me (a now long-time and happy user of Lua), Lua without tables is like, uh, C without pointers. Tables are IMO really the core of Lua. But certainly, a subset of Lua can still be used for simple scripting. I'm curious to know what users of embedded Lua think about that.
Regarding selling products with "programmability", I agree that, unless you target only pro users in a specific niche, giving programmability with C and at the firmware level (I mean, you could always provide a C interface and only allow some kind of "plugins" while not giving access to the full firmware, which is already a bit less painful) can be a nightmare, and simple scripting is much, much easier both for the customers and for the vendor.