The following example may help to understand a little more about \directlua{} expansion.

\documentclass[11pt,twoside]{article}
\begin{document}

\def\xx{Hello}
\def\yy{(}
\def\zz{)}
\newcommand{\hellofromTeX}[1]{

\directlua{

\hellofromTeX{"Hello World"}
\end{document}

Here’s how it works.
Code within \directlua{} is expanded according to TeX rules and then sent to the Lua interpreter. In the above, LuaTeX “sees” \xx\yy#1\zz and expands it as follows:


\xx --> Hello
\yy --> (
#1 --> "Hello World"
\zz --> )


After this expansion, the code is fed to the Lua interpreter, which sees Hello("Hello World") and executes


function Hello(str)
tex.print(str)
end


The function tex.print("Hello World") is called and typesets some text.