Didn't realize level gen could make empty space like this

That's due to how sewer pipe rooms specifically generate. They first start completely filled, then

—(with 3+ adjacent rooms) the shortest path connecting all adjacent rooms is carved out of the perimeter

—(with 2 adjacent rooms) a straight-ish path is carved through the middle to connect them

—(with one adjacent room) a path is carved from the adjacent room to the center of the room

This case is a merging of type 1 (lower room) with type 3 (upper room). Merged sewer rooms are responsible for many of those s-shaped dead ends.