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Keys allow the player to access a locked door on the same level, but it's not as easy as just walking over and picking it up.
As of version 1.6.2, keys are only generated as part of a Treasure Machine. Generally this comes in two parts: a key holder, in which a challenge is presented to the player in order to obtain the key or not die after obtaining it; and a reward room, where valuable items can be found behind a locked door that can only be opened with the key. See the Treasure Machine page to find out all of the surprises the game has in store when generating these tricky puzzles.
A key in a "statuary" machine room.