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It seems to be symbolic for a collection of people going through hard times, perhaps depressed. Take the third verse for exampe - everybody is having a good time ("everybody is making love"), but that isn't who this is about, realy - note "except for Cain and Abel / and the Hunchback of Notre Dame". Cain, Abel, and Quasimodo aren't having fun, they're depressed. Ophelia in the next verse is only 22, she's restricted ("she wears an iron vest") and she finds death "romantic" - possibly she's considering suicide. We see this pattern in every verse, but we see it from another angle in the second to last - this verse is happy. The Tiranic is about to sail, calyso singers are laughing, "fishermen hold flowers"... and so "Nobody has to think too much/About Desolation Row". This, to me, seems to contrast this happeness against Desolation Row, implying again that it is about depression. Althoguh it's almost talked about in a physical sense I think is symbolic. Desolation Row isn't a place, per se, it's just that to be in desolation row is to be depressed.
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