The Grotto of the Water Nymphs is an underground cave inhabited by the Water Nymphs. It's located deep under the Tree Fort and can be entered through the lake next to the Tree Fort through a deep tube on the bed of the lake. Finn and Jake enter this grotto in "Beyond the Grotto" when they try to save their Sea Lard. They then encounter the Water Nymphs in the grotto and are offered frog hot dogs.
The Water Nymphs are seen partaking in frog smashing to make frog hot dogs in their grotto. The grotto also has a whirlpool, which sucks people into another dimension and which Finn and Jake enter in "Beyond the Grotto."
The grotto is underground, and so all of its pools of water and structures are made of hard dirt and grass. The water is green and falls off tiny waterfalls that drop higher up the grotto from small lagoons.
The grotto also has a whirlpool with fauna around it.