There’s a side quest with an NPC called Nipa. If you start it and leave the quest in the first two stages (where the previous villagers are now zombies chasing him), they will repeatedly spawn in very large quantities
I’m pretty sure the respawn is not meant to happen, but I’m almost certain the amount of mobs that spawn is unintended. The quest suggests a handful of villagers in the first spawns, plus 2 at the end. Instead, you get hundreds of weak melee mobs
Now for how and why this can be exploited - you can turn the difficulty up to whatever the max you have unlocked, then easily melt the spawning mobs for an insane exp amount. You can move between the three-four points to rapidly force spawn hundreds of them.