The Varosians are the humanoid descendants of the original prison facility prisoners. After 200 years they are still ruled by the descendants of the Officer Elite Guard, and governed by the Governor. They appear to live in the original prison cells, and get their food rations from a dispenser.
The Governor of Varos changes often. When the Governor makes a proposal a vote is called. If the vote goes against him he is subjected to cellular bombardment, which is also broadcast.
The sixth Doctor and Peri join a group of Varosian rebels. As well as the Punishment Dome there is also a transmogrification programme in operation; when Peri is caught and subjected to transmogrification she starts to transform into a bird.
The Doctor managed to liberate the Varosians, who were being exploited by Sil. With no television broadcasts the Varosians were left wondering what to do with their time.