In visual novels, direction is how the player experiences the audio-visual cues of the game. In other words, when and how a reader sees the art assets/text and hears the audio assets. This includes the camera work (panning, zooming; etc), scene transitions, sprite/other art changes, sprite movement/blocking, sound direction, the timing of when and how much text appears on the screen, and so forth. Good direction can take a bland scene and make it memorable. Poor direction can take a good scene and make it bland - or worse.
Direction is handled on a micro-level by the writer(s) of the script, artist(s), sound technician(s); etc and on the macro-level by the overall project lead or director who makes sure each individual contribution works together as a whole.