Goblin-town was an Orc dwelling under the Misty Mountains, which was ruled by the Great Goblin.
Goblin-town was a series of tunnels and caverns, which went all the way through the mountains, with a "back door" near the Eagle's Eyrie in Wilderland, which served as a means of escape, and an access to the Wilderland. A cave with a lake was deep beneath Goblin-town yet was connected to the Orcs' tunnels, with one passage leading to the "back door".
Description
Goblin-town was an Orc dwelling under the Misty Mountains , which was ruled by the Great Goblin .
Long before the coming of the Orcs of the Misty Mountains, nameless things were living in the caves. Around T.A. 2480 the Orcs of the Misty Mountains started making secret strongholds in the mountains blocking the passages towards Eriador and expanded those caves, digging tunnels to connect them; without their knowledge they drove those slimy creatures into dark corners. One of those "original owners" was Gollum, who was living at a nearby underground lake, feeding himself on raw fish as well as Orcs that he killed.
The main gate of the town was in one of the passes of the Misty Mountains, but by T.A. 2941 travellers learned to avoid that dangerous road and the Orcs opened another under the safer High Pass: The Front Porch).
During the journey to Lonely Mountain, Thorin and Company rested in a cave and were captured by the Orcs. They were brought before the Great Goblin, who accused them of spying, and was enraged when he found that Thorin was carrying Orcrist, a sword the Great Goblin remembered from Gondolin. With the help of Gandalf, the Great Goblin was slain and Bilbo and the Dwarves escaped, pursued by a force of Orcs.