This is the place where the vision with Medivh's body, Khadgar and Anduin Lothar appears. It is unknown whether this is meant to portray the literal area where Medivh died as two from four visions originally happened elsewhere.
Garona said that Medivh should be located at the very bottom of the lower area which would be his study and observatory on the top end of the Karazhan tower. The room with Medivh was described as an underground cave with reddish plain and simple collection of iron furniture and was depicted similarly in Warcraft III. It's possible that Blizzard changed or overlooked the detail if they intended this room to be the literal place of Medivh's death.
The study also resembles the room with the Guardian's Font from the Warcraft film's universe in which the film Medivh died. In this case, the room was not underground but a part of Karazhan's upper levels.