Note: this post contains spoilers for B2 The Keep on the Borderlands.
It's traditional for dungeon modules, especially at low levels, to have tables for rumors that player characters can discover or know at the start of play. This is a convenient way to make it so that players know something about the dungeon and its contents, but have limited and possibly incorrect knowledge. Some of the rumors are typically false, such as the (in)famous claim that "Bree-Yark" is the goblin word for "I surrender." (Later we find out it actually calls more goblins to the scene.)
False rumors are an interesting facet of dungeon exploration, because they let the designer - with just a line or two of prose - to really change the players' perception and approach to the dungeon. Let's look at the false rumors in B2 The Keep on the Borderlands:
2. A powerful magic-user will destroy all cave invaders.
6. All of the cave entrances are trapped.
9. A fair maiden is trapped within the caves.
10."Bree-yark" is goblin-language for "we surrender"!
14. Piles of magic armor are hoarded in the southern caves.
15. The bugbears in the caves are afraid of dwarves!
19. Nobody has ever returned from an expedition to the caves.
Now, rumor #9 is perfectly in line with what players might expect. But consider - if you go into the Caves of Chaos expecting a fair maiden at the end of one of the sub-dungeons, it'll create this sense of expectation that totally changes the experience. It could also make a skeleton about 5'6" tall a really, ah, interesting find. Likewise #14 could add an interesting wild goose chase as players convinced that there is magic armor in the southern caves go seeking secret doors (and get more wandering monster checks).
Rumors #2 and #6 are somewhat helpful - they will put the players in a paranoid mindset that will serve them well in the Caves of Chaos. The magic-user also creates the kind of mystique that, again, recasts the light in which players experience the caves. If some creature knows about the false rumor, they could really wreak havoc on the PCs - using various effects to make it seem like they are near some powerful wizard's underground laboratory, being watched by invisible servitors, etc. #19 also enhances the mystique.
#10 and #15 are fun because of the false sense of security they create in the players. A PC dwarf showing bravado to a bugbear only to find out that they aren't really afraid could be a classic moment, as can be the instant PCs find out what "bree yark" really means. These "treachery moments" are great possibilities.
The false rumors are also a sort of guide to re-skinning the dungeon: none of these would be hard to make true. There could be a fair maiden or a trap at the entrance to each cave. Magic armor would be an interesting twist, particularly if the cave inhabitants find it first! And the referee could always make a real wizard's laboratory, possibly stealing some elements from Quasqueton in B1 In Search of the Unknown.
One interesting thing about false rumors is that one dungeon's false rumors could also be rumors - true or false - about another dungeon. The powerful magic-user might be in the Cave of the Unknown or Quasqueton or somewhere else entirely. I think it also gives the possibility of a whole list of potential rumors - some that a referee inserts into their dungeon, others which they adapt as false rumors. This is something that I'd like to put on the list for Dungeon Crawl #4: tables to generate rumors that you can adapt to any dungeon you're running, whether true or false.
Thoughts are welcome on dungeon rumors and the role they've played in your games.