Can you save a state and revert a machine to a previous state (like in VMs)? Or is the whole thing part of a state machine?
If not, "state" doesnt quite cut it. "lua_Instance" would IMHO be a better name.
I disagree with the "PIET" argument. If you are not doing that one-time-throw-away-script, coding is at least as much communicating with other humans as it is communicating with the computer. So anyhting *I* remember will is not a good point.
Is it worth changing it? I don't know, I like renaming things when I figured out a better caption for something thats more precise or to now fit better in an overall naming scheme.
Albeit I can fully undestand if someone says, a rename is definitely not worth the breakage when the library binding would be called lua_newinstance instead of newstate.