Kind of a neat idea, it's got me thinking since it's not a "typically D&D" sort of trope. Here's a spray of stream-of-consciousness, sorry!
What makes 1984 so terrifying, to me, is that it works as is without advanced tech (or magic). For that reason, I'd think that the number one rule in such a world would be No Unapproved Magics. Like, at all. So the basic police are going to be spending a lot of time ferreting out and controlling unapproved items & casters. Alongside would be the total surveillance (in brain and out, ie, the Thought Police) and the total obedience through fear and ignorance.
I can't see this working without complete isolation from the rest of the D&Dverse. Aside from keeping hidden, it seems that the subversive elements getting in/out would be a critical part of adventuring here. For that reason, I'd put it in a demiplane, on a rock in the AStral, or even better, I'd make it a Dread Domain surrounded by the Mist. (Man, for some reason, a Domain based on 1984 seems just too perfect to me, now.)
Not sure who'd make an ideal "controller", though, but I think plain old humans would do nicely. Perhaps not even especially magical ones, if all the magic required to power the surveillance is derived from some sort of great "engine" at the heart of the it all. What if it's just a plump, curly headed guy in a tweed jacket and spectacles who happens to have a dozen illithid liches in his thrall doing all the heavy lifting, while he spends most of his time affably interrogating and sentencing the troublemakers?
Surveillance is everywhere
Surveillance is a school of magic: detect thoughts, etc; truesight, see invisible, etc; detect X, locate X; comprehend languages.
Police have truesight lanterns, detection spects, etc; and prefer taking prisoners alive for interrogation
Interrogators use mundane and magical means, aim to keep prisoners broken but intact.
Magic is subversive
Power in D&D stems from magic,
Ownung magic items, casting spells, so much as thinking "abracadabra" is all forbidden
Communication is subversive
Communication magic is forbidden; and lines are monitored
Unapproved speech (including foreign languages, magical words, codes, etc) are forbidden
Substantive cmmunication is hard (DC checks to convey/understand subversive info when speaking Newspeak in public)
Deception is subversive
Illusion, disguise, shapeshifting are forbidden (to the people)
Hiding & privacy are fobidden
mindblank, private sanctum, portable holes, pocket dimensions, etc are forbidden
Propaganda is Truth
Indoctrination is a school of magic: charm, dominate, etc; memory modification; certain illusions
Truth is malleable, and subversive: Asking about that shopkeep who was here yesterday, but isn't anymore, is forbidden.
There is the hated Enemy, and virulent bigotry/otherism is encouraged among the People.
Also, to be forbidden is forbidden: "Nothing is forbidden in Utopia!"