Some observations about the dungeon's variety of furniture.

[TollyCastle]

The dungeon has many different types of decorations hinting at the dungeon having multiple different uses.
There are skeletons shackled to the wall alongside ornate furniture and alchemical stations.

This may hint at the dungeon having been occupied for many different reasons at different periods of time, such as a mausoleum, a subterranean palace and an actual dungeon.
The ornate carvings in the dungeon brick blocks suggest it also being some kind of temple, which seems to be proven by the lunar cult worshipping the moon lord at the entrance.

 

[ShadowOfDarkness]

Or, there were experiments being done on them by the casters of the Dungeon.

In addition, the Old Man seems to have gotten himself enslaved to Skeletron, as he quickly calls Skeletron his "Master".