Warning: This dungeon will permanently disappear after finishing it, so make sure you get everything inside before you do.
As soon as you are able to move, you should see some stairs nearby. These lead to a room that’s locked with a gate, with the lever to open it teasing you on the other side. At the far north of the first area, there is a chest, so make your way to it to get a Seed of Magic . Find the doorway on the southern side and go through it to come out on the overworld (nothing’s there, so no need to explore). Re-enter the tower through the central door on the southern side and move towards the slime to have it run away and hide in one of the pots. Break the pot and speak with it to learn that humans are on the third floor.
Note: There is an enemy in this dungeon called the 1:8 Slime that will call for backup repeatedly. If all of them are present, then they can form a King Slime. However, if you have the firepower, try and kill all but one so it keeps calling more, boosting your EXP by a lot once you finally finish.
To continue with the dungeon, go back to the first floor and get to the stairs in the northwest portion. On the second floor, you can head south to find the locked gate from the beginning, so pull the lever to open it, then use the stairs southwest of that to ascend to the third floor. Pull the lever here to open the gate, where you’ll find all of the villagers from the three towns you’ve just visited. The man with the turban on the southern end sells a few items, so feel free to check out his wares.
You can also talk to the older lady in the north if you want to rest for free. The little kid slightly southeast of her is the one you want to talk to open the locked gate in the northeast. One of the pots next to the church people contains Horse Manure , and you can obtain a Tangleweb and 5 gold coins from the lot of barrels in the northwestern room. Go up to the next floor to find another area filled with monsters. Unfortunately, the gate next to the stairs is locked, so you’ll need to go around to the west and then south to eventually reach the stairs in the middle (don’t forget to unlock the gate), where there will be a short scene.
Go to the balcony and talk to the old man to make another scene occur, where something a little bad happens. As you attempt to leave, the old man will stop you (as well as reveal who he really is) and asks you to take his place in defeating the monster who caused the flood. He mentions there’s a raft you can use near the bottom of the tower, and he also gives you a Prayer Ring . Make your way back down the tower, until you get to the floor with the broken bit on the eastern side, which is where you’ll find this raft.
Your goal is to sail around and look for the entrance to the Sunken Citadel, which is where you will find this Gracos monster you saw briefly. You can visit Wetlock and Spilton-on-Sea to chat with a few people about the events happening, with one particular NPC in the latter pointing you in the direction of the Sunken Citadel. It is west and a bit south from Spilton-on-Sea and when you find the portal, enter it to be transported to the Sunken Citadel.