I've had the opportunity to code in a few MUDs and for a time, even ran my own surreal Cabaret Voltaire, a short-lived enterprise as resources (such as good Unix servers with a 64k leased connection to the Internet) are very scarce in these parts. As a Quality-Control archwizard, I've wandered through different mud areas, both good and bad, and all this is all good old Common Sense.
Good MUD areas usually have the following characteristics:
Before you begin coding an area, ask yourself - would you, as a player, enjoy visiting and exploring the area for days and weeks on end? Should it conceal secrets which may be discovered only by players who doggedly examine and search everything? Why would people want to visit your area above other areas in a MUD? Your area should be enjoyable to visit for both the solo-adventurer types and larger bands of players. No NPC should be impossibly hard to subdue, although one should always present a challenge for the most capable and well-equipped of adventurers.
I am not in the habit of mixing my NPCs. An area should be coded specifically for a smallish range of player levels. Don't put newbie NPCs in a room directly next to a level-30 NPC who would kill a newbie adventurer simply by breathing on it. If you intend to code a newbie area, you should either make it clear that it is a newbie area, or restrict access to higher level players looking for cheap thrills or easy cash.
Few players enjoy getting lost in a maze. While mazes are interesting (albeit cliched) additions to an area, some degree or orderliness in room directions dramatically increases your area's playability. Linear areas are best for towns and cities (north, south, east, west) while you may wish to add more realism to your area and increase the number of directions one could travel in if one were, say, in a desert or a forest without any definite trails to follow.
While heavily NPC-populated areas are usually frequented by players in search of experience points, it is usually inadvisable to place a NPC in every single room. An overall NPC-to-room ratio of 1-5 is desirable.
For added realism, many more rooms should be allocated for areas such as barren plains or a desert. You want to give the player an illusion of actually making a journey to get to another place, and not just get there by pressing two or three keys. Very large areas with similiar descriptions can be used to evoke a feeling of monotony and repetition, ie. the feeling one will surely experience while trudging across a vast, parched desert. Here is where the concept of 'virtual rooms' comes in useful - to conserve memory and disk space on the MUD server.
Very well-written and elaborate descriptions of each room are usually necessary to capture a player's imagination. Don't code too many 'plain rooms' in your area. An average description should be at least 2-3 sentences long. Don't just mention what the place looks like; you could also suggest how the place makes one feel, the sounds one might occasionally hear, the smells that waft about. If possible, also describe every item in your room. Give them character. This is all very highly dependent on your own imagination and descriptive skills, possibly one of the most salient things that distinguishes a competent coder from a truly good MUD wizard.
Make sure your area has its own distinctive culture or theme. Nothing irritates me more (as a player) when I encounter an area where it is obvious that rooms and NPCs were added on an ad-hoc basis, with no real thought given to its theme. If you are coding a town, especially, it is interesting to give that town its own character that sets it apart from a generic MUD town. Think about what might attract people as tourists or bounty hunters to your area.
When coding an area, be sure not to have that Superweapon Tunnel Vision that too many wizards fall prey to. Not every area in a MUD should have a superweapon, and one does not need superweapons to code a very good area. Interesting items that do things for a player, such as a pet, some unusual gadget, magical items or even a gag one can use to play on other players - all these may attract players to your area. Interesting items also require the most imagination, ingenuity and coding knowledge to make - possibilities are endless. Make the properties of some of these items a secret, which may be discovered only after some careful investigation.
While it may be tedious to insert 'chats' into every single NPC and every single room you code, it is always nice to code roomchats for particularly important rooms, main thoroughfares such as a busy street, where you often find people passing through. This is useful for creating ambience. Tips for quests and such may also be included in roomchats. NPCs should have at least 4-5 different 'chats' or they will risk appearing repetitive and a tad ridiculous. Overly 'chatty' NPCs or rooms also tend to be highly annoying.
A good MUD area should be one where a player can either venture alone or in a party. Some dangerous areas might be better off visited in a well-armed group, whereas there should always be NPCs or puzzles which can be taken care of by a lone adventurer.
While most NPCs should have physical descriptions of at least 3 sentences, overdescribing an NPC may sometimes be offputting. They should not be laden down with too many items (for MUD balance) and should carry up to a maximum of 3 items with cash. However, it is not at all necessary to code items for every NPC in your area. There should be a fair number of random and generic NPCs such as villagers, traders etc. and some particular ones who play a more significant role in your area. Introducing 'ambient NPCs' in your area may also give it an interesting flavour. For example, a low level dustman or a lamplighter who goes around lighting up lamps in the evening - players may not find them worth killing for money or experience, but they are fun to have around nevertheless. Don't think that your NPCs should only interact with actual players. For example, you could have two wandering NPCs actually engaging in an argument or even a battle if they happen to be in the same room together. Remember also that if you have wandering monsters, place reasonable limits on their wandering - you do not want a poor, wandering bag lady to end up in incongruous areas such as a knight's bedroom, the top of a lighthouse or the middle of an ocean.
If you have any degree of control over where your area will be placed within a MUD, make sure that it is at least quite easily accessible either on foot or via some means of transport that will not take longer than a minute or two to arrive. Some very good areas on MUDs rarely get visited because they are tucked away in remote areas where one is forced to use many stamina points to reach. In the event that it is placed relatively far away from the main MUD thoroughfare, make sure your area is self-contained, ie. it has its own pub, church, hospital and/or bank so that players can spend all their playing time there without having to commute back and forth.
Insert rooms which, when a player walks into it, triggers an event to occur in another room in your area. For example you may want the action of a player entering your town to trigger the loading of a gang of pickpockets or bandits in a room elsewhere to increase the probability that the player will encounter these bad hats while walking around your town.
When your description of a room says that 'It is getting darker...' you should always decrease the lighting level for that room. Unless you are coding a special dungeon or sewer, use default lighting levels for normal daylight for your ground-level rooms or your city. If not, make torches fairly easily available at the entry point to your area. Don't make all your rooms excessively bright or dark without any special reason for it.
Last but not least, you should have a lively sense of humour to keep your area's visitors constantly entertained and amused! Good luck!
These guidelines are by no means rules etched in stone - they are of course, my (subjective) opinions and as a Mudder, I have found that the most popular areas usually have 5 or more of the qualities described above. As a wizard, you are only limited by your imagination, as there is very little that cannot be accomplished by a competent LPC programmer. Remember that a good MUD area is a work of art; a wizard is akin to an artist or movie director - see it as a novel or a film; how a plot unfolds and how feelings and expectations evolve as a player moves from room to room. It's a wee bit more than just LPC. :)