While previous Unreal Engines were "subtractive" - you started with carving out a space out of solid mass - Unreal Engine 3 is "additive". You start with void - empty space and you have to fill it out and ensure that players will always look at something and will not be able to see the void beyond your level. For convenience reasons Epic decided to offer "subtractive level" option when you crate a new one. This option relies on a big "blue" (additive) cube brush around the whole available space.
This convenience comes with some price though. :-) Big additive cube brush must be first in order - otherwise it will overrule all subtractive brushes before it. While in previous Unreals it was normal to send subtractive brushes "To First" now you have to send big-blue-brush to first as well every time you do this. It's now generally preferred to create additive levels.
- It's more natural for most levels. Native for Unreal Engine 3.
- Better option if you want to replace brush geometry with static meshes later - you simply replace blue brushes for meshes which is more natural than tweaking yellow brushes.
- Much shorter light calculations for simple levels.
- Easy support for skydomes.
- You can "emulate" subtractive easily with blue brush around the level. This is better than to use default big blue brush which is just way too big to be worked with in convenient way. See How To Fix Subtractive Level for more.
- More effort for simple indoor levels (but not that much).
- Faster for pure indoor levels.
- More natural if you switched from previous versions of UnrealEd/Engine.
- Even for simple cube level it results in ridiculously long light calculations (caused by the big blue brush).
- You can't make sky easily. No skyzone info anymore like in previous UnrealEds.
- You can't mess with the order of big blue brush. If you put anything "to first" you have to put this brush "to first" after that.
It's recommended to go for Additive level every time. If you want to work in a Subtractive fashion, create some additive brush by yourself and don't create it bigger than necessary.