I believe the canals of Half-life 2 are a pretty good example of intelligent level design. It’s a perfect location for that part of the game for a few reasons. (Warning: possible spoilers)
First of all, Half-life 2 is linear. There’s no denying it. And placing the two chapters (Route Kanal and Water Hazard) in City 17 canals is a perfect excuse for placing huge, unscalable walls either side of the player to keep them going where they need to go.
At this point in the game, you’ve just been detected by the Combine and are making your journey to Eli’s base, Black Mesa East. The cramped tunnels help convey the escape atmosphere, trying to make the journey undetected in the small, low surveillance area. It also helps that you are always below street level and literally making the journey “underground”.
Route Kanal is also a chapter that starts off giving the player weak weaponry: a crowbar and a pistol, and later, an SMG (which is quite good, but not as awesome as the Pulse Rifle). The twisting passages really suit this environment, where hiding from all the forces against you is a very suitable course of action. You can fire a few shots, hide around a corner and reload, then emerge and shoot some more. Some of the bits that involve hiding from the Hunter-chopper are incredibly fun with the perfect atmosphere.
Water Hazard is also brilliantly placed. It involves a lot of fast driving where you very rarely stop to keep fighting. The areas are all big open streams that comprise City 17’s water management. There are always walls to drive along to evade bombs or enemies, plus plenty of supports that the CPs stand on for you to drive through and send them hurtling towards the water. Nothing’s more satisfying than running over a CP before driving around a corner and leaving the rest behind.
And then there’s the downside, which is:
Explosive barrels. Everywhere.
How did they get there? How much do they know?