Furnace is the name of a ancient Ophidian city deep inside the mountains east of Monitor. The name comes from the massive lava lake that surrounds the city. It creates so much heat, that only few can survive under such circumstances (such as Gargoyles). All the evidence in the city points to the fact that Furnace was the city of Balance, like Spinebreaker was the city of Order and Skullcrusher the city of Chaos.
Furnace appears to be related to the dungeon that was, in the First Age of Darkness, known as The Hole to Hades. It is not exactly clear what happened to the city, since it was still in good condition, although many bodies were found here. The most likely explanation is that most people fled the city (explaining why everything looked as if recently vacated), and the limited fighting didn't cause any damage.
After the Ophidians left, the Gargoyles took the city as their own. They lived there in peace, until the Imbalance Storms brought all of them but one into a coma. The only one awake, their leader Lord Zhelkas, tested the Avatar to grant the hero passage to the outside world.