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Dungeons can randomly occur anywhere on the ground where a Black Plot appears. You can use your tool, the Hoe, to plow these and you will usually find garbage or other things, but sometimes you will find a stairway that leads to a dungeon. Inside the dungeon, the monsters are far more tougher (compare the ones in the cave) and do not really offer many rewards upon killing. There should be a treasure chest (or multiple) inside the dungeons, so quickly enter the dungeon you've uncovered and use a pickaxe to break the chests open. Once you obtain the treasure, swiftly exit the dungeon via the ladder as the monsters there can kill you quickly.
The treasure chest can contain many things like coins, building materials, ingots, diamonds, Bloodthirsty Ring, and Traveler's Boots.
