Cave City is a city located underneath the Ozure Isles. It is ruled by King Silly the Second (Silly as in 'Silhouette'). All of the inhabitants of Cave City are shadows, and only have half a face. If someone who is not a shadow enters Cave City, the King sends for Ozeerus, who shines a Blue Ray on them, causing them to be turned into shadows. To enter Cave City, you must have three rocks.
When Benny, Trot, and the Scarecrow found Cave City, they entered by rocking with laughter. They met Orpah, the merman, in Cave City. He informed them that he had been stuck in Cave City for years, but had avoided becoming a shadow because the Blue Ray doesn't work on mermen. When King Silly saw the new arrivals, he ordered them turned into shadows, starting with Benny. When Benny didn't turn into a shadow, Ozeerus turned up the Blue Ray so high it exploded the wall of the cave and allowed the travelers to escape unscathed. (The Giant Horse of Oz)