I think this is a really great approach, getting into the engine you will quickly learn the concepts of game development and start to see what is possible. Which is almost anything if you know how to spin it.
On creating levels- the strongest level designers I know usually start out trying to recreate a small area from a previous game, photo, movie, some sort of reference with established concept. Because this allows you to concentrate on technique. A common mistake I see level designers make is trying to create something completely unique their first time. It often fails for a few reasons. First, anytime you are learning things you are gonna fail which is good because that’s something you can learn from and secondly, I’m going to paraphrase Salvador Dali, the famous surrealist painter:
“The artist that paints a purple sky, always paints the best sky because they don’t exist.”
Meaning you can’t really question how well done it is because how can you argue a purple sky doesn’t look like that?
A great blog entry I strongly suggest reading that relates to all of this is the making of Dust for Counter Strike, arguably the most played multiplayer map ever made. Dave Johnston was still a teenager and was actually trying to copy screenshots of another game Valve was working on at the time, TF2.
“Starting the map was easy - it was a lift directly from the TF2 screenshots Valve had unveiled a few months before. The map boasted road flanked by buildings, leading up to an archway and a wall dividing it in two. Each building and wall decorated with ornate trims along the top or bottom. It was these features that would define the architectural style of Dust.”*
Down to UE4- I’d think about what kind of environment you want to make (don’t worry about the gameplay just yet), find some reference. Sketch out a simple layout. Keep it simple. First thing, establish your scale. How does it feel running around? Start blocking out from there, identify the key parts to your reference, don’t get caught up in details. What really makes the scene? For example, an outdoor scene- the ground is hugely important.
Once you get a blockout that feels good, start working on the presentation. This includes anything art related, materials, meshes, landscape, etc. The next layer I usually like to concentrate on is the lighting and atmosphere effects (particles/fog/process volumes/etc). Figure out what is lighting your scene. Make light sources connected to the lights, avoid phantom sources unless you want to fill an area with light. This can be the sun/torches/lamps, etc.
You also want to post results of your work for critique. Showing others your results is how grow as a designer.