I haven't used Lua, but I've used Starlark extensively and I will say that static typing is a boon, especially in the infra-as-code space where the feedback loop can be very long.
I sort of agree with this, except that I don't think it's square one. The ability to change config without rebuilding your artifact is one of the advantages of separate config files, and using an embedded language like lua wouldn't remove this advantage.