It may be better to think of it as a key/value table (a "dict" or "hash") that recognizes when it's being used as an array and optimizes its internal storage accordingly. It always has dict/hash operations, but indices of 1..n are stored more efficiently, and a couple functions reflect this common & algorithmically significant case: the length operator returns the n of 1..n, and "ipairs" iterates over the {1, value}..{n, value} pairs. (The un-ordered {key,value} iterator is "pairs".)

Typically, it's clear upfront whether you're using it as an array or as a table; there isn't much overlap. I understand it being confusing in the beginning, but it's really not a big problem, it's just Lua's version of "oh god, the parens/significant whitespace/etc.". (That and indexing from 1. Not a fan of that personally, but whatever, Lua is handy.)

So yes - you can use negative numbers as indices. Or strings. Or other tables, or arbitrary C pointers. Arrays are just handled better.

It has to do with "holes" in the array. If you have a Lua array like: { 1 , 2 , 3 , nil , 5 }. That "nil" causes problems. I, personally, haven't had an issue with this, but it does come up regularly on the Lua mailing list.