The Great Forest is the massive wooded area beyond the former site of Mobotropolis, and covers much of Northamer. It acted as a safe haven for the Mobians who managed to escape the city during Dr. Ivo Robotnik's military coup; Knothole was built deep within the forest and remained hidden there for over a decade. For many years it acted as the home for the Knothole Freedom Fighters; however, when Knothole was bombarded by the Egg Fleet, the surrounding portion of the forest was burned to the ground. Despite this, much of the sprawling, deep forest remains intact.
The Great Forest developed many centuries before Mobius' modern era, and many of its trees grew to be extremely large and long-lived. Within its bounds there existed a number of limestone caverns, many of which were later exposed by erosion to become the Great Valley, a large area hidden from view by the forest. The valley became the site of Knothole, a small village that served as a refuge to inhabitants of the Kingdom of Acorn in times of trouble, such as the Great War. It particularly served the House of Acorn and their court, but later became home to many of the former residents of Mobotropolis following the city's takeover by Dr. Ivo Robotnik. (CSE)
The forest, as Knothole's hiding place, served as staging grounds for two groups of Freedom Fighters: the Original Freedom Fighters under Tig Stripe, and the Knothole Freedom Fighters under Sonic the Hedgehog and Sally Acorn. In particular, the later group used one of the caverns near the village as their clubhouse, eventually transforming it into Freedom HQ. The Great Forest continued to serve as Knothole's hiding place throughout the First Robotnik War and well into the second, though Knothole's development later made its location obvious to outsiders. (StH: #1, #43, #142)
Ultimately, Knothole was destroyed by an attack launched by the Egg Fleet, and its citizens relocated to New Mobotropolis. Freedom HQ remained the Freedom Fighters' primary base for a time, but the region of Knothole was left largely uninhabited and became known as the Great Wastes. (StH: #175, #176, CSE)