I find it so incredibly hard to design a level and I don't know why. What planning is gone into designing a level? How can I get inspired? I want to design open world levels like in the original Spyro the Dragon trilogy on PS1.

Level design is hard because, whelp... it's more involved than throwing around assets.

There is a lot of design decisions and psychology that goes into it. And usually, you never want to start off with full detail. You always work from the ground up.

So to start off, you typically block out the environment. Leave out any clutter like trees, boxes, and just leave the ground, Walls, and areas that the player will usually be able to visit. Here is where you'll need to figure out the flow, the direction, and the problems.

Is the level too linear? Where can enemies hide? Is the level design interesting? Is it too confusing? Is it too busy? Are parts of the level too similar to one another? Are there landmarks? Can a player easily navigate around this? Is it too small? too narrow? Too large?

Revise the base, and go down the list again... and again... and again...

Then you can start working on detail. And once again... go down the list over and over again. Only this time you have new steps.

Is the level too busy? Does everything fit? Does it make sense? Is it distracting? Is there a story? Does this house look like it's been lived in? Does this cave look like it's dangerous? Is there enough blood? Is it clean enough?

Then comes the lighting... and the lighting is always the hardest part. The use of light's hold a huge psychological impact. Lights act like a Landscape, a sense of direction, a sense of atmosphere, and more.

If you are trying to make a horror game, throwing the entire level into darkness does not make it terrifying. using too few lights is just as effective as the previous one. Clever use of lights however, can lead players to where you want them to go for a build up.

Like in a Dungeon diving game. Laying a torch next to a skeleton with objects arranged in such a way that the unhindered light points to a door. And the skeleton's hand points to the same door... or another door. Naturally, the player will most often go in the direction of the lights. But if a player notices the subtlety, he will go in the direction the skeleton is pointing for a secret or something.

Refer to this link.

https://developer.valvesoftware.com/wiki/Category:Level_design

Be sure to ramp up the difficulty slowly. Introduce new concept in a safe environment where it is okay if they don't get it right away, then use what the just learned in a harder environment. Once you have taught the player a few mechanics, then start to mix the in interesting ways.

And be sure to play test your level. You wont get the perfect level on the first try. You will need to have people play it to find what works and what doesn't.

Besides the visuals and art of level design, there are also the meta aspects of level design. That is - how many worlds your game has, how many levels each world has, what's the progression system (complete one level to unlock another one) etc. I recommend checking out SOOMLA LevelUp for this. It's an SDK that provides a rich model of game design objects such as worlds, levels, scores, rewards, gates, missions and schedules. It's available for Unity and Cocos2d-x and both are free and open source.

For proper disclosure I'm one of the founders of SOOMLA.

I'd also add to get the level playable as absolutely as quickly as you can, even in its roughest, most basic form. Why? Because you always need to be testing. You need to play that thing over and over again (preferably other people as well) to get it working well (or even at all!)