In recent decades, the Variational AutoEncoder (VAE) model has shown good potential and capability in image generation and dimensionality reduction. The combination of VAE and various machine learning frameworks has also worked effectively in different daily life applications, however its possible use and effectiveness in modern game design has seldom been explored nor assessed. The use of its feature extractor for data clustering has also been minimally discussed in the literature neither. This study first attempts to explore different mathematical properties of the VAE model, in particular, the theoretical framework of the encoding and decoding processes, the possible achievable lower bound and loss functions of different applications; then applies the established VAE model to generate new game levels based on two well-known game settings; and to validate the effectiveness of its data clustering mechanism with the aid of the Modified National Institute of Standards and Technology (MNIST) database. Respective statistical metrics and assessments are also utilized to evaluate the performance of the proposed VAE model in aforementioned case studies. Based on the statistical and graphical results, several potential deficiencies, for example, difficulties in handling high-dimensional and vast datasets, as well as insufficient clarity of outputs are discussed; then measures of future enhancement, such as tokenization and the combination of VAE and GAN models, are also outlined. Hopefully, this can ultimately maximize the strengths and advantages of VAE for future game design tasks and relevant industrial missions.