Room 23 is a locked room in a facility within in the Hydra compound where Karl and Walt were held by the Others, and Karl was subjected to a brainwashing video. The DHARMA Initiative originally used the room as part of their psychological experimentation, but it was later co-opted by the Others after the purge. (Access: Granted) The facility bears the Hydra logo, although it appears to be separated from the rest of the Hydra station. Room 23 is located at the end of a hall. The door next to it leads outside. Behind it is a stair because the terrain is lower at the backside of the building than at the frontside.
Walt was held at Room 23 by the Others some point after they took him off the raft. According to Ben, Jacob wanted Walt there because he was important and special. However, Walt posed a greater threat to the Others than they expected, as he had been doing something unspecified in the room that frightened them so that they would not go in to see him. Ben responded to a particular situation with a blaring alarm and people in commotion, where Juliet suggested that Ben take responsibility and bring Walt back to his father. Ben refused, and Juliet took him outside to show what Walt had done: a group of dead birds were lying on the stairwell beneath a boarded up window. ("Room 23")
Walt later told Michael that the Others made him take tests, after which Beatrice Klugh became agitated and threatened to put Walt in the room again. Walt instantly froze up at the mention of this. ("Three Minutes")
Karl was subjected to brainwashing inside Room 23 by being forced to watch a video, strapped to a chair, while extremely loud drum-and-bass music was played. Alex, Kate, and Sawyer found him with an IV in his arm and wearing LED goggles. When he was freed, Karl was not fully conscious and had to be carried out by Sawyer. The video Karl was subjected to contained various quick cuts of images and text, as well as a reference to Jacob and short glimpses of Gerald DeGroot and Alvar Hanso. At the time, the facility that housed Room 23 was guarded by Aldo. ("Not in Portland")
10 high by 10 wide octagonal matrix of alternating image squares, with 3 squares missing from each corner
"Plant a good seed and you will joyfully gather fruit" superimposed on
10x10 octagonal image matrix with the two central horizontal and vertical rows being two cells combined and the central four cells being combined. The images change in symmetrical patterns and include:
a bright white light shining into a dark cave
a Sailboat on water in silhouette in front of a setting sun
fireworks exploding in sequence
an obstetric ultrasound
a sequence of close ups of doll's faces:
left side rotated 90° clockwise
right side rotated 90° clockwise (three images)
center of face rotated 75° clockwise
a statue of Buddha
close-up of a high contrast painting: a face focusing on the eyes and nose
magenta and blue plaid morphing patterns
a video clip of the Earth's moon as it changes from half-full to full
"We are the causes of our own suffering" superimposed on
a sequence of about 6 various stills of black-and-white insects
a sequence of about 5 various stills of orange fish
an energy-saver lightbulb curves to resemble a yin-yang symbol
a 3/4 full moon
a bird's nest
a necklace ornament resembling an eye (from Turkish mythology; see Nazar)
a speedometer from a 1992 or 1993 Honda Accord with the needle at zero.
close-up of gears, probably from a watch
a pasta dish; possibly linguine with spinach
"God loves you as He loved Jacob" superimposed on yellow carpeted stairs
magenta and blue plaid morphing patterns
a changing white squiggle (possibly a lightbulb filament) pattern superimposed on:
the inside of a factory or similar facility with many pipes (sequence of three different stills)
The voice of a woman who sounds like Bea Klugh repeating "Only fools are enslaved by time and space" can be heard multiple times in the reversed version of the brainwashing video. This hidden clue echoes similar words found in a so-called 'Dharma talk' entitled the Buddhist Perspective on Time and Space:  "The wise know how to use time and space perfectly; they lead free and harmonious lives. Fools are enslaved by time and space; they are busy running around all day. Wise or foolish, the difference is obvious."
The voices in the beginning of the reversed audio may sound similar to foreign language, but is simply the reversed conversation of Alex and Sawyer at the very end. The following sound that may be described as similar to panting is simply Kate repeatedly saying Sawyer's name to get his attention immediately before they carry Karl out of the room.
The atrocious noises seem to sound like fireworks in the reversed audio. There is a harsh screeching sound, and as it fades out, it explodes numerous times.
The official full-length video was released on the Season 3 DVD as an Easter egg. It is presented in widescreen.
Lost: The Complete Third Season (DVD) Commentary: "Damon Lindelof: The Dharma Initiative was doing all these experiments on animals, so is that room that Karl was in for humans, or what kind of animals were they showing those films to? Like, what was really going on there?"
Cultural references in Lost
(direct references only)
1984 - George Orwell's novel 1984 depicts Room 101, a torture chamber in the Ministry of Love wherein prisoners are subjected to some manifestation of their greatest fears.
The 23 Enigma refers to the belief that most incidents and events are directly connected to the number 23, some permutation of the number 23, or a number related to the number 23. It can be seen in Robert Anton Wilson and Robert Shea's The Illuminatus! Trilogy (therein called the "23/17 phenomenon"), Wilson's Cosmic Trigger I: The Final Secret of the Illuminati' (therein called "The Law of fives" and "The 23 Enigma"), Arthur Koestler''s Challenge of Chance, as well as the Principia Discordia.
Movies and TV
A Clockwork Orange - The video from Room 23 is an reference to the Ludovico technique, a fictitious type of aversion conditioning used in A Clockwork Orange. With this technique, the subject is medicated with a pro-nauseate drug and forced to watch a movie with disturbing images and loud music, thereby associating violent ideas with the sensation of being ill. Additionally, Alex's room number in the prison where he is held before being removed for the Ludovico Technique is 23.
The Prisoner - It is also a reference to the episode "A Change of Mind" in the cult 1960's TV series, The Prisoner, which featured the 'aversion room', with similar brain washing room features. 
The film in room 23 even seems to use the typeface "Albertus", which is similar to the iconic font used on The Prisoner.
Star Wars - Besides 23 being a reference to one of the Numbers, It is possibly also an allusion to cell block AA23, where Princess Leia was held in Star Wars Episode IV: A New Hope. This reference furthers the analogy of Sawyer's explicit reference to "the ol' Wookiee prisoner trick", which is used in Star Wars to rescue Leia.
The Dark Crystal - The image of Karl being strapped to a chair while a red light shines on him is similar to the scene in The Dark Crystal where the gelfling Kira is being exposed to light from the fractured crystal in order to drain her life essence.
The Parallax View - The video is reminiscent of the disorienting montage that the Parallax Corporation administers as a psychological test, particularly the abrupt intercutting of words and images.
The Blood of a Poet - In this surrealist film directed by Jean Cocteau, the main character is walking through a hallway of hotel rooms and peeks through the keyhole into the rooms. In room 23, he sees a statue slowly come to life as well as a hypnotic spiral.
The Bible - The "God loves you as He loved Jacob" slide is a reference to Malachi 1:2-3 and Romans 9:13. Paul quotes Malachi in Romans to show that God chose to bless Jacob and his descendants and to curse Esau and his descendants. The blessings/cursings were not based on the two brothers' righteousness or sins, but rather on God's prerogative.
Esau gave up his birthright to Jacob.
Buddhism - "Plant a good seed and you will joyfully gather fruit" is a quote from the Buddhist text Dhammapada: "The kind of seed sown / will produce that kind of fruit. / Those who do good will reap good results. /Those who do evil will reap evil results. / If you carefully plant a good seed, / You will joyfully gather good fruit."
"We are the causes of our own suffering" and "THINK ABOUT YOUR LIFE" are similar to Buddhist references to the Four Noble Truths.
The caption "Everything Changes" is similar to a Buddhist sutra that states, "Everything changes, everything appears and disappears; but there is perfect tranquility when one transcends both birth and extinction."