This abnormally-sized oak fell years ago, after the first few months that the supernatural presence of the Horrors on the island made it grow out of proportion and be unable to support its own weight. The Horrors' effect on most vegetation has been similar, but the Great Fallen Oak was already freakishly big to start off with, so it suffered more than most.
Inmates quickly claimed the oak to themselves, and several niches and tunnels have been carved into it, so that it looks like a morbid tree house made by amateur woodworkers (the spikes that have oftentimes impaled things giving away just how dangerous unskilled labor can be). This fallen tree is big enough to fit various people in the small cave-like holes that have been carved in, and there's still space for more- again, freakishly big tree.