Before Lollipop and Mint took over ownership of the Island, it was used by a secret society of wealthy individuals that used the island to indulge in their depraved and sometimes twisted desires. People were kidnapped, transported to the Island, and forced to serve the desires of the Islands Elite.
The Lab was used to alter those captured to the Elites desires. And when it wasn't doing that it was used by its owner to create hideous, sex crazed monsters, that he would release into the surrounding jungle to capture any who would try to escape.
Now the Lab is owned by Bubblegum, an eccentric witch who uses it to create the islands special Aphrodisiac pills that offered to guest for personal use. She also uses the lab for her personal experiments. Be wary of her, her sadistic tendencies often get her trouble with Lollipop, and Mint.