This is the area immediately inside the cave leading to/from the cloudland. You can exit though the door even if you didn't use it to enter (although you may not be able to get back). You can only go south-east here. After this point, you may encounter the pesky dwarf and he is hard to avoid on the walkways in the cave. If you can move quickly, you should have a problem or you can use the Magic Ring to keep him from finding you.