The Ruined Dungeon is a zone placed randomly in the west (Maj'Eyal). It is a single dungeon level with a static layout.
The zone has a locked chamber in the north; opening the door to this chamber requires solving a puzzle. Just south of the locked chamber, there is a control chamber with 6 orbs. The orbs are deactivated until you defeat each one's guardian -- a randomly generated rare monster somewhere on the level. Defeat all 6 guardians to activate the orbs, then touch them in the proper sequence (see below). Inside the locked chamber are a random artifact, 16 other items (vault quality), and the unlock for the Infinite Dungeon campaign.
The zone is inhabited by random monsters (drakes, vampires, and horrors are typical), and is a not-terribly-unlikely place to find some of the obscure Alchemist Quest ingredients.
While the zone is not exceptionally dangerous, you should be careful around the monsters here. They are generated randomly, but they can deal noticeable damage in one way or another. Inspect the enemies if you're cautious about them. Occasionally, a powerful monster gets spawned in this place - for instance, high-level orcs, elven mages and drakes can appear. Be prepared to escape if you encounter something you're not yet ready to take on.
You probably should do this dungeon eventually, especially if you still don't have the Infinite Dungeon campaign unlocked - it's not particularly deadly, and there is a lot of loot. Just be careful and keep in mind that something powerful may show up.
Once all orb guardians have been defeated, the orbs must be touched in the correct order to open the locked chamber. The correct order can be obtained from the three lore pieces which are spread throughout the dungeon as signposts. There are two versions of the puzzle, each with a unique solution.
To interpret this, look for the ellipse (an ellipse is a 'triple period,' or '...') in each sign post to determine it's location in the three-part poem. For example, this is the middle part of the poem.
... The feather flies gently in the wind, The tree's roots run deep...
The solutions are below, for those who want the simple answers.
Each orb, when you interact with it, will give you a description of the orb itself, indicating which orb it is. Again, for example: "Flames burst out of the orb" relates to the fire orb. You will know that it's the correct orb when it says "The orb glows brightly."
Here are the solutions:
Solution 1: Water -> Dust -> Wind -> Seed -> Magic -> Fire
Solution 2: Darkness (absorbs all light)-> Blood -> Time -> Ice -> Thoughts -> Corrupt
Solution 3: 1 -> 6 -> 2 -> 3 -> 4 -> 5