The single screenshot of this area shows a large cavernous underground chamber, with a flat plateau protruding from the cavern wall surrounded by a two chasms. On the plateau, a lit campfire is burning. Next to this, three red barrels are present, one upturned. The barrels have a smooth texture, and could be metal or plastic.
We can assume that Kain accesses the Hallway Elevator through a door in the Inner Bastion area, and descends to a series of caverns beneath the Bastion. One of these would have contained the Subterranean Campfire. As there is no light shining in from cracks in the ceiling, it seems reasonable to assume that this area is deeper than The Steam Pipe Cave and The Headless Statue Chamber.
The lit campfire suggests that this place is occupied, and that perhaps its denizens have fled on Kain's approach. They could even be hiding somewhere intent on ambush.
There are a few possibilities as to who could be down here. Consider that in this period in Nosgoth's history, Moebius' mob of vampire hunters had just completed their genocide of the vampire race. Given how widespread the movement was across Nosgoth, it seems unlikely that all divisions of their militia would have been informed of their victory, and would therefore still be hunting vampires. In Defiance, a group of vampire hunters are shown congregating around a camp fire while at rest, and this could represent a similar such gathering. The vampire hunters may even be using the caves as a means to try to reach Malek's Bastion and loot the Sarafan weapons within.
Another possibility is that the people in these caves are taking refuge from the recent collapse of the Pillars of Nosgoth. In all screenshots of outdoor areas seen, the sky is covered with a cloud that appears to be smoke or heavy dust. This seems to be widespread from The Pillars at least as far as the Bastion (and probably significantly further than that). Given the reverence towards The Pillars by Nosgoth's inhabitants, their explosion on the horizon and the resultant shockwaves and dust cloud, could be interpreted as an apocalyptic event, a sign of the imminent end of the world. The people in these caves, the users of the camp fire, may have retreated here from Nosgoth's surface to seek some sort of sanctuary from the turmoil above.
A third theory could be that the users of the campfire are here due to the significant ores in the Soul Machine Mine area. Perhaps they have entered the caves from an unseen entry point, and are trying to obtain some of the rarer ores to be sold to the highest bidder.
Given that this area is deeper than the Steam Pipe Cave and the Headless Statue Chamber, it seems likely that it is visited after those areas. It could be that this is the last section Kain has to complete before he reaches the Soul Machine area.
The screenshot discussed here was discovered on the official website and portfolio of Aaron Hausmann in 2008. Shortly after it was added to his site, the image was removed, but fortunately had been saved and preserved for the purposes of this essay.
Aaron's LinkedIn page confirms that he was employed as an artist at Ritual Entertainment between December 2003 and January 2007, and now works for Nerve Software.
Some very limited description was provided on Aaron's site, now removed:
Environment Artist on Legacy of Kain: The Dark Prophecy - PS2, Xbox, PC CANCELLED
LEGACY OF KAIN: CANCELLED SEQUEL
Modelled and unwrapped props to hand off to texture artist.
Modelled, mapped, and lit environments based off of designers' layouts. Textures created by another artist.
The name "Subterranean Campfire" has been used based on the features shown in the screenshots. No official name for this area has been revealed.