Originally described as the most advanced and civilized city at the time of its sinking due to an earthquake, the myth of Atlantis has been constantly altered and expanded upon since it's inception. Several popular versions of the Atlantis myth exist. One is that the city is ruled by mermen while another is that technology and magic have continued to advance beneath the water due to a protective shield, or something similar, that surrounds the submerged city and prevents the inhabitants from drowning.
In Indiana Jones and the Fate of Atlantis, Atlantis is presented as a sunken city built as a series of circles, with the inner circle containing a horrible secret. It's haunted by the spirits of its doomed inhabitants. They grew greedy with power and their most advanced invention, a machine that could turn people into god-like beings, turned the citizens into frightful monsters. This machine is the reason that the Nazis seek Atlantis in this particular story.
Atlantis: The Lost Tales is another adventure game set in the fabled city.