I've seen a lot of people come to the forum recently, who want to know about modular building. These are a couple of PDF's I found quite a while ago which may help people get a grasp on the concept.
Lee Perry - Lead level designer for Gears of War - Techniques on Modular design
MODULAR TECHNIQUES: JEFF SEVERSON
These should help alleviate any questions you have regarding the concept of modular level design.