The archeologists thought that these dwellings used to (or still, we don't know) house religious shrines. They (these dwellings) now stand along a wide avenue ...
thought by archeologists to have housed religious shrines整个做dwellings的后置定语,be thought to 相当于be considered to,是被认为的意思,by archeologists是个插入结构,这样分析下来整个句子就很好理解了吧。