Located between the Forsaken capital, Undercity and the city of Gilneas, Shadowfang Keep is one of the best dungeons for any level, and blows every other early instance away in terms of mood and variety.
The instance has undergone some changes since the game's initial launch. It was previously the home of the corrupted Archmage Arugal, who was the Gilnean leader originally responsible for bringing the Worgen curse into the city.
Arugal's error in summoning the Worgen drove him mad, and he fled with his summoned 'children' to the Keep, murdering its original resident, a Baron, whose ghost you must defeat in order to reach Arugal, and claiming it for his own. The original version of the instance had you fighting against Arugal's worgen minions, along with ghosts of the murdered Keep residents.
After Cataclysm, and the introduction of the Worgen as a playable race, the dungeon's story was changed. After Lord Godfrey commits suicide and is raised as a Forsaken, he also betrays his new mistress, Sylvannas Windrunner, and kills her. She is raised from the dead once again, and Godfrey, having now betrayed both the Worgen and Forsaken, retreats to the Keep, where he takes control. This gives both factions a reason to go through the dungeon.
Shadowfang Keep is so popular that it has a regular difficulty for players Level 16-22, and a Heroic difficulty for Level 85s only.