I'm glad you asked.
Ok, so each level is designed in the Flash IDE, and is stored in a movieclip ( And each of the elements which go into each layer is a mc too ).

Those are the layers which make up each one. I usually start with "Wall map" which is just a simple traditional tile based layout,

These are just your typical 32x32 tiles. Obviously you can't make a whole level like that in one go, in real life it's doing a room or so at a time, then testing it.
Next up I like to add the actual wall images, like so ( So we're in the very bottom left of the map here )

Not the most fun image in the world I must admit. I like to then add a basic floor to the level, having the player just walk above blackness when testing is weird, so here we go...

It's starting to come together, although the next part is my least favourite, the collisions.

Because we use Nape for the collisions I have to place those white rectangles over all the static ( i.e walls ) objects, so the bullets know to collide with them, the player can't walk through them etc.
By this stage we have enough to test a level, with no baddies or objectives or anything.
Let's quickly skip ahead and pretend the level is finished, and Lux is doing his polish pass, which usually involves the floor.

Luckily level 2's floor is quite a straight forward one ( Level 4 is hellish, which has prompted me to write this post just to try and justify why it's taking forever ). So all those layers go to create this:

All the debris, light glows etc. sit in the floor movieclip. Let's tackle the objects layer next.

As you can see, the Object layer contains all the physics objects, such as the desks, the baddies, effects like the fan shadow or sparks spitting out of a broken light etc. The orange circles you can see are the light probes used for the dynamic shadow effect, and the blue rectangles are various triggers ( Such as restarting the ambient SFX, which we have killed in the previous room as we wanted it to be quiet and dark in there, with just the sound of the fan and the level's background hum ).
To be honest I do think to myself quite often, "What the fuck am I doing, this is a Flash game".
I'm going to be a bit lazy and not go too much into the Nodes layer, as I did it to death here ( Basically it's for the baddies pathfinding ).
By now we're in the position to test the level ( Keeping in mind this whole process is really just done a room or two at a time, so we can test every little thing ).
What's left ? The Shadows / Lights layer. Because we're using the IDE we can also use the filters which come with it, so for the shadows I just duplicate the Wall Map mc we saw above and put a drop shadow on it. The lights do have to be placed by hand though, and sometimes we need additional shadows.

The highlights layer in the floor mc have to align with the lights. Also we use this layer to put all those "Wall edges" in which hide the join in the wall tiles.
Only 2 left to go, we're nearly there.

This is the layer we use for the foot steps. The player detects which colour he's walking on and plays the correct sound based on that. We also use this a lot in the water levels, as it enables us to slow the player down by being able to detect when he's in water as well as playing the splish splosh SFX.

Finally the bump map layer, which we use for the specular lighting effect. Thankfully that's quite straight forward and doesn't need much tinkering with, although it's not a straight copy of the floor mc just in a greyscale ( Which Flash's adjust colour setting does for us ) it's not a silly amount of extra work.
And that's it, that's what goes into making a typical Outpost level. That's not factoring in of course any special set pieces we need ( In level 2 for example, we have the part where you get your motion tracker triggered, the explosion, the running from the explosion sequence, the boss etc. ) and making sure the level is fun and makes sense in real life. We spend a lot of time, Lux more so than me, trying to justify the layout of levels. It can't just be a maze, it's meant to be a real living place. That's why for example in level 2 we have near the kitchen area lot's of little store rooms because you would store the food somewhere ( "What the fuck am I doing, this is a Flash game" ).
It's always a fine line between making a level fun and relatively easy to navigate and grounding it in some sort of realism.
Thanks for sticking with this post so far, it's been a bit of a monster.
Squize.