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In I always end up with the problem that the dungeon is all the way down there, and my town is always up there (on the surface). Really the only reason I can't move underground is that food can only be grown on the surface.

Is there any food source that I can create/grow underground, thus stopping the need to have townies and heros constantly moving up and down the levels?

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Cave Mushroom Farms can be placed underground. They need to be placed on dirt and require one mud block per harvest.

Alternately, you could set up some prepared food barrels underground and your townies will constantly move food to those barrels, saving time for when someone actually gets hungry.

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