Mostly because that's what Torch uses. LUA itself is extremely fast for a scripting language but while that characteristic is vital in video games (where LUA is used quite a bit), it's pretty irrelevant for machine learning since the core of these engines is usually written in C/C++ for speed, and the scripting language is just used as an entry point that makes the API and data entry easy.
Still, I think ultimately, LUA is a liability for Torch, and it's not helped by the fact that not only is TensorFlow a superior competitor (in my opinion) but also because TensorFlow is based on Python (which is vastly more popular than LUA).
Despite all their investment in Torch, it wouldn't surprise me if eventually, Facebook transitions to TensorFlow because it's probably what it will take for them to effectively compete against Google on the machine learning front.
I'm curious if it's for Torch, or perhaps there's something more fundamental about why it's a good language for AI that I don't know yet.