I talked a bit about this in my Warframe Review when I said story can be woven into the design of a place. Let’s do an exercise to illustrate what I mean.

Walk into a place of some religious significance. The stained windows show a specific scene, the walls are lined with statues that refer to a specific person or persons, the mosaics are aligned in such a way to convey an image. All of this tells the story of a place whether illustrating events directly or just the emotions and feeling within a place.

You walk into a park, what do you see? Perhaps trees arranged in a way that does not seem natural. You venture a little closer. In fact these trees were planted in memory of children who had passed away due to a specific illness. All this is story.

I mentioned the Witcher 2 and Dark Souls in my videos as having great story design, and that comes down very much to how much the environments aid the stories. Dark Souls more so than the Witcher 2, since the lore of Dark Souls is almost exclusively told through the environment, just look up the Broken Statue inside the Undead Parish if you want an example of that.
With shining examples like that I think that this is a great way to tell story within an interactive medium.

So the next time you walk through a level, have a look at what was done with it. And the next time you take a walk outside, see what stories you can find!