A Chao Garden is any location inhabited by Chao, usually forested and including a small body of water.
History (Pre-Super Genesis Wave)
One of the earliest known Chao Gardens was located in Soumerca, and was protected by Chaos. For an unknown period of time, this Chaos Garden was left alone by the inhabitants of the land. However, the three way war between the Felidae, the Nocturnus Clan, and the Knuckles Tribe culminated with the Knuckles Tribe invading the garden to seize the Chaos Emeralds that sustained it. As a result, Chaos was enraged and proceeded to wipe out the Knuckles Clan before being trapped in another Zone by Tikal. (CSE)
In 3237, Sonic the Hedgehog, Miles "Tails" Prower and Knuckles the Echidna discovered a Chao Garden near where the old Power Ring Grotto had been; Rotor had noticed odd mystical energy in the area and the others went to investigate as the Grotto had been previously sucked dry by Dr. Ivo Robotnik. While Tails was surprised to learn that Chao lived in gardens, Knuckles explained that some of Tikal's vision showed Chao living in environments like this near the Mystic Ruins. They found the flourishing Chao Garden and even befriended some of the critters, but the Garden soon came under attack by Dr. Eggman who had also noticed the mystical energy source and sought to take it for himself. When he realized that the garden contained no Power Rings or Chaos Emeralds, he decided to destroy it out of spite. Sonic, Tails and Knuckles fought back, but the wreckage of Eggman's machines destroyed the garden nonetheless. The Chao were relocated to the Lake of Rings near Knothole. (StH: #173, #174)
In 3237, another Chao Garden came under attack by the Eggman Empire; Snively Robotnik attacked in a giant mech intending once again to recover a source of strong mystical energy. This led him to the home of Vanilla the Rabbit and her daughter Cream the Rabbit. Cream attempted to hide the local Chao in their home while Vanilla called for help on an old radio; help soon arrived in the form of Amy Rose. With assistance from Cream, Amy was able to deliver a finishing blow to Snively's mech; however, it collapsed upon the house, destroying it. Amy then offered to help the rabbits move to New Mobotropolis, but Cream refused, thinking it unfair to leave the Chao without their garden. Realizing that many of these Chao were former residents of Knothole's Lake of Rings (prior to its destruction), Amy suggested that NICOLE could refurbish the recreated Lake of Rings in New Mobotropolis into a new Chao Garden, to Cream's delight. (StH: #217)