Initially, the MC puts Fairy into the dungeon because he knows nothing about her. He literally has no reason to trust her behavior, and he doesn't want to risk danger to his family. (Depending on choices in your own playthrough, he may have done the same with others, like Kyra and Ivy.) He's not necessarily cruel (unless you want him to be), but he's wise and takes precautions especially when it comes to his family.
How Fairy behaves after she's put in the dungeon should be entirely dependent on your choices with her. You can either have the MC heal her (give her a meal where she feeds herself, give her a nice bed to lie on, have nice conversations with her, etc.) or break her (other choices, like feed the meal to her, telling her she'll make a good slave, etc.). Her feral nature was caused by her past masters (especially the Decayed), all of whom seemed intent on breaking her with cruelty. You'll eventually "subdue" her either way; it's just what you want for the end with her. Maybe you want her to act like a normal servant who respects and even loves the MC (which is more of a winning her over than actual submission). Alternately, you might prefer to have her submissive and still speaking in broken words, etc.
I've restarted this game a couple of times (most recently within the past month), and I can tell you that I've never seen any kind of apparent skipping of content with Fairy or anything (other than not seeing things from a different path than what I'd chosen for her). But the other members of the household will indeed interact with her while your MC isn't there; obviously she needs food, etc., when the MC is away.
But what becomes of Fairy in the end should be entirely up to your choices. If the game automatically chooses without your prior input, that does sound like a bug. But if so, that's a bug I've never seen.