The Dragon's Swamp is the location where the Blue Pearl of Purity was. It's a swamp with pure water, due to a Water Dragon.
According to a story called Santa's Present, a kind man named Santa healed an injured Water Dragon. When it was cured, the dragon, out of gratitude, told him he will grant a wish for him. Santa then asked for delicious water for his sick mother to drink. The dragon then plunged itself into a swamp and made it pure and drinkable. Santa then brought his mother to drink some of its water. Since then, villagers have called it the Dragon's Swamp.
Tatsuya and Asuka went to the village where the swamp was in search of a blue orb. They managed to find it, along with the Jakaens, who followed them. Asuka summoned the Water Dragon out of the swamp, which turned itself into the Blue Pearl of Purity. But when Jokaen, the Jakaen top commander, got hold of it and turned it into the Blue Pearl of Impurity, the swamp polluted into a regular, dirty swamp. Tatsuya then vowed to get orb back and retore the swamp back to its beauty and pureness.