How do I level design?

I've played around a little bit with tilemaps and the tilemap utility that allows for easy layout creation through picking and "painting" tiles onto the background but I've recently bought https://www.scirra.com/store/royalty-fr ... set-01-518 which is a series of individual sprites. Is there a way I can just "paint" with them like I do a tilemap or do I have to manually import every sprite and place them to make my scene?

I don't think you can paint on the layout like you can in the tilemap object. If all your sprites are the same size you could use a graphics program to put each one onto a single image (spritesheet) in a grid pattern, save it, then import it into the tilemap object and adjust the tilemap cell size to match. Other than that you could make your own lavel editor if you have enough experience.

You would need to build a tilemap image to import in as a tilemap, then you would be able to use the tilemap object to "paint" your level.

The resource you linked to does not have this done for you, as many of the art assets are not the same size.

If you put all the 16x16 images together into one file to build a tilemap image, that would give you a nice base foundation to work from.