The dark place I found myself in was unlike anything I could ever have imagined; it wasn't solid, it flowed. It was conceptual and subjective. 
- ― Alan Wake
Dark Place is a supernatural location appearing in Alan Wake. It is a surreal underworld where fiction becomes otherworldly reality. It is somehow beneath the black waters of Cauldron Lake and is the prison of The Dark Presence.
Background
The Dark Place is the area that seems to be somehow beneath the black waters of Cauldron Lake. It serves as the home and prison of the Dark Presence. While the exact nature of the Dark Place remains something of a mystery, it is apparent that it is an utterly otherworldly realm, and is responsible for bringing creative works of art to life. While the Dark Presence that resides there constantly attempts to wrestle creative control from the authors for its own dark purposes, there has been no evidence of such interference from the lake itself. It seems that the Dark Place merely manifests the artists work, and is not responsible for the actions of the Dark Presence.
Nature
The power of the Dark Place allows creative works of art to manifest in reality around Cauldron Lake, though the origin and true scope of this ability is unknown. Unlike the Dark Presence, it does not appear to have anything resembling a consciousness or an agenda, as it manifests Alan's manuscript pages from both when he is influenced by the Dark Presence and when he is not equally.
The Dark Place serves as the home of the Dark Presence, sealing it off from the world at large, and ensuring that it is bound to the events of the story it infiltrates. As such, the Dark Presence cannot directly affect the real world unless it is written. In the event that the artist does not give the Dark Presence the story it wants and finally sets it free, it is still able to utilize the power of the lake through finding and exploiting loopholes in the story to its advantage. This does not necessarily mean that the Dark Place is of a malicious nature, as it also allows the artist to adversely effect the Dark Presence through their story.
The Dark Place seems to be subjective in nature, and would seem different to different types of artists. It is a place of pure creativity, where the artist can use their chosen form (in Alan's case, words), to change and manipulate their surroundings. Certain physical constraints are also absent. For instance, while Cauldron Lake is large, the Dark Place beneath it seems to be far bigger, almost infinite. Also, though certain 'underwater' type effects are employed such as bubbles coming from Zane's diving suit, breathing, walking and physics seem largely unchanged from reality and bear little or no resemblance to actually being underwater. This suggests that the waters of Cauldron Lake are in fact merely a portal to the Dark Place, which is another realm altogether as a mirror of reflection.
Trivia
- The Dark Place is probably inspired by Otherworld from Silent Hill. Due to the similarity that it can be effected by the character psyche, transforming the reality into a hellish nightmare of trying to find the answers and lost loved ones.