Thank you for your inquiry of the sewers of Galmair. This has been a much discussed topic among some people of Galmair. The sewers were built, originally, for the purpose of keeping the waste of Galmair away from the towns folk. However, living on a mountain, it soon became evident that simply digging a hole for waste to be thrown in was going to get more and more difficult, and less and less healthy. A solution was found in slimes, which were reportedly (based on one of the late great minds of alchemy) created by alchemical means. The buildings you see down there were less of the nature of a palace, and more of the nature of a workstation for this alchemist to do his deeds, away from the prying eyes of those who would wish to secure the secret of slime creation.
As a direct result of the cleaner (although still mucky) environment, certain individuals with less savory lifestyles chose to inhabit the area (those halflings that you have written of). Also, on the odd occasion, individuals have been buried within. As for some of the stray mummies that have been found within, currently, I can attribute no source. If you have partaken of any fishing, you might have also encountered undead in that regard. They have likely been carried in by the tide.
I do thank you for the interest in the history of Galmair however.
Chancellor Artimer Fault