It is said that since the Dawn of Man, a Golden Emperor has dwelled in the Forbidden Palace. While obviously an exaggeration, it is true that parts of the palace complex date back to the first emperor to unify Cathay - perhaps even earlier. Even through countless rebellions and the creation of a myriad of dynasties, for if anything true of Cathay it is that it seeks to break apart when it is whole and seeks to be whole when it is apart, an emperor has always lived there. Even when the capital was moved during the previous dynasty, they took apart the empire palace and moved it plank by plan, stone by stone, golden throne by golden throne, to its new home in Winding Three Rivers.
It is also said that each emperor that has lived their has gone mad, though some have been more mad than others. His Celestial Majesty, the Golden Emperor of the World, Ruler of the Moon and the Sky, is madder than most. Originally a rebel and a general, he grew aloof from politics after making himself emperor in the Red Blade Rebellion. It is said that he murmured to himself while walking through halls at strange ours of the morning and began wearing a mask and gloves in order to avoid contact with contagions that he was sure surrounded him.
About ten years ago, he banished his entire court, including his concubines, wives, and children - indeed, everyone but his little lap dogs - from the palace. Since then he has lived his life in a single room of the tallest tower of the outer wall. His courtiers gather around the palace's moat each day carrying scrolls relating the issues facing the Kingdom That is the World. He gazes at these with the aid of a spy glass and lowers his instructions down in a small basket.
The reason for the emperor's madness is the subject of much debate in the teashops and brothels of the capital. Tradition holds that the ghosts of each emperor stay within the palace in order to advise their successors, though being mad themselves this advice is always poisonous to the mind. Others say that the various secret societies which truly run the empire have corrupted the emperor either with strange alchemy or foul magic.
In the years that have past since he banished his courtiers, the majority of the palace complex has gone into ruin almost preternaturally fast. Knowing that even the guards have been banished, many rogues, thugs, and lowlifes have stolen into the ruins to abscond with the goods the treasures said to lie within. Few have returned, and those that have have spoken of horrible creatures, rooms and corridors with unnatural dimensions, and fiendish traps that no previous record concerning the palace mentions.
The Forbidden Palace is meant to be the "campaign dungeon" of Cathay if I ever run it. Quite a bit of the dungeon will be the upper works, but the complex stretches a good way below ground as well.