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Fatback Cave is on the tip of a peninsula of the City Isle to the south of the Imperial City Arcane University. The Goblins in this cave are equipped with leveled shields and mostly blunt weapons, and in most occasions, are slightly above the Hero's level.
There is a low level enemy right at the entrance. Walk through the hallway, a room, and another hallway. Enter a larger room, at the end of which is a narrow pass. Look out for the pressure plate that activates a swinging log trap here, and beware the Goblin Berserker and the Goblin Skirmisher just beyond the trap. Next enter a large cavern at the bottom in which is the entrance to the next area.
A typical great chamber, large room with a trap and enemies above. To ensure the trap isn't set off by the goblins above, take the first right in the large chamber area to get to the upper area. Take care of the goblins here and then it will be safe to explore the rest of the lower area and use the bedrolls. Go above (past another trap) for the entrance to Fatback Deep Basins.
The final area. There are three traps in this area, two swinging log traps in a row. When used wisely, they can get rid of enemies. At the end is a glowing pit, across this pit is the main treasure chest for the cave. In the pit is a chest with the second best loot in the cave.