Dungeontown, situated on the Imperial prison planet of Despayre, was essentially an improvised shanty settlement for incarcerated individuals.
In 3 BBY, Teela Kaarz was part of a group of several hundred inmates from Dungeontown. These prisoners were selected by the Empire to provide extra forced labor for the building of the Death Star in orbit around Despayre. They departed Despayre on the prisoner transport vessel designated GLTB-3181.
The destruction of Dungeontown occurred in 0 BBY when the Death Star unleashed its power upon the planet.