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Ardashir, “festhalls” (Jeff Grubb’s word, substituted for my “brothels” for TSR Code of Ethics reasons) vary in customs, but the more elaborate ones ARE “a cross between a private club, a casino, and a brothel.”
This is due to the fact that many folk in Faerûn can readily couple with someone (on a rooftop or behind a midden in crowded cities, and ‘out in the woods’ or in a nearby thicket or hollow in a distant pasture, in a rural setting) if mere sexual gratification is all they want. What they go to the brothels for (and yes, some of these establishments are private clubs, particularly those specializing in S&M, mate-swapping, or inter-species congress) is for ‘added fun.’
By this term, I mean: striptease performances, playacting and dressing up in outlandish costumes (“Hah, my pretty, I’m not merely Rorold the fat butcher from down the street - - I’m Ravagar Wanderglar, dread pirate of the Serpent Seas!”), the chance to gamble (betting one’s body, temporary freedom, or items of clothing) or gambol (yes, dance), make love to music, have access to situations visitors wouldn’t dare try outside a club (mock rape of a priest or priestess or ruler or other authority figure), making love on a tomb, crossdressing, eating food off the bodies of strangers, and so on), and the chance (particularly in masked revels) to enjoy someone else in a small community who’s married to someone else - - to ‘find’ each other in public, or even be seen heading off to a tryst, would cause a scandal, but going to the brothel separately and getting up to all manner of hijinx there, even (in some cases) if observed by fellow community members, is ‘okay’ (the brothel is accepted as ‘outside’ normal society, a safety valve in which folk can temporarily set aside their usual public manner and status).
I see the popularity of brothels in the Realms as based on the Faerûnian love of play: as in our real world, children lose many opportunities for playing as they grow up (unless they can shift into participation in a sport, or acting, or performing and use that as an outlet), but brothels offer a place to go on playing, lifelong.
Some people never engage in a sexual physical act at a brothel, but visit them often. Some of these go to watch the fun (ogling), some go for the chance to flirt or make lewd suggestions they’d never dare utter elsewhere, and some just like to chat or play cards or drink with others while naked, or while crossdressing, or while pretending to be of a race or profession (example: the pirate above) that they’re not. Some folks frequent festhalls to play tag, or blindfolded tag, or all sorts of other games that again, are play but not necessarily sexual.
(And then of course there are also brothels that are ‘simple whorehouses,’ particularly in ports where sailors make landing after long voyages without access to ‘fresh faces,’ or caravans disperse ditto.)

simontrinity, Shadowdale’s house of pleasure exists because of the many caravans that stop there. You’ll find modest cathouses (of the sort Ed referred to, at the end of his post, as ‘simple’) in most caravan stops throughout the Realms, no matter how small and rural they are (desert oases of course excepted). I’ll pass on your request for more info, but I understand Ed might be doing a ‘hands off’ on Shadowdale because of his needs when doing the not-yet-written second and third Knights novels.

Dargoth, a “feasthall” (as opposed to ‘festhall’) is a room or event of temporary dining and debauchery, situated in an establishment that doesn’t offer such amenities the rest of the time. (Real-world equivalent: “Friday Night Wings” offered at a drinking-spot where a patron can’t get ANY food on other nights.)
So when a tavern offers “something more” for a limited run engagement of travelling ‘professionals’ (an arrangement that usually means said ‘pros’ avoid paying full taxes because they ‘move on’ before a tax collector can ever get to them, and the establishment pays little taxes on the extra coin generated because they ‘forget’ as many nights as possible of the extra takings), they’re running a “feasthall.” The term of course is a contraction of “feasting hall,” a name applied to a large room whose purpose is allowing larger numbers of folk to sit down and dine together.

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In the Realms, the most popular term for restaurant (there are local variants) is either “feast hall” or more often “feasting hall” (to avoid confusion with “festhall”) or “feasthouse” in Common, but “skaethar” in Chondathan, a word that has crept into Common to serve as the ‘formal’ word as opposed to the everyday slang term (I suppose, to put things in Modern English terms, “skaethar” would correspond to “dining establishment” and “feasthouse” to “eatery”).

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