The dark alley is the one of the only "markets" in Old Vizima. It is quite abandoned during the day, but at night a few fences roam the area and will grudgingly do business with anyone, even witchers. They will buy and sell almost anything. You can find, or more importantly, convert to cash:
Your path choice affects the fences. When you first arrive in Old Vizima, there will be at least one neutral (blue) "Fence" in this area. Upon returning to Old Vizima from the swamp cemetery, the fences will not be there unless you are on the neutral path. On the Scoia'tael path there will be a "Scoia'tael quartermaster" near the gate to the dike instead. On the Order path, there will be an "Order quartermaster" near the gate to the swamp cemetery instead.