Things to do:
1) There are three (that I can think of) 'meta' descriptions around the beta telling you about people lead astray by the statues:
- Diary of Jumper at the starting beach [AIR]
- Beggar near the circus shows who has given all his gold away [FIRE for some reason]
- Drowned pearl diver on beach near Evelyn's lair [requires pet talking to the crab] [WATER]
- Can't remember EARTH's.
I can't remember the last one, it escapes me; anyhow, they all prove that the Watcher Statues are a menace, so let's unleash BOO!* on them.
2) Shoot the watcher statues with their element to free the elementals trapped inside. e.g. Air = Blitz bolt, Fire = Flare, Water = Rain, Earth = Poison Arrow
3) Once you've killed all four elementals, the cave will open
4) Talk to the NPC inside; a lot of his dialogue is referencing other Larian games. "Joining" his harem doesn't appear to set any quest flags, if you're worried about it.