Maybe it was a prison for a bunch of cloned florans who had inevitably gone evil and turned against their creators. I'm pretty sure that's been the plot of a few cartoon episodes, at least.
Yes, I have encountered this glitch before in the Apex town on my homeworld. I think it happens when I go into a menu ( crafting, backpack, etc) while having a weapon equipped. When I close the window I accidently killed someone that was standing next to me because I clicked x manualy instead of just clicking the corresponding menu key. Then I walk over a screen and the locals seem to have cloned themselves. This has happened several times. Don't know if the accidental murder has anything to do with it though.