It is a zoo made entirely out of bubbles. It is an area that surrounds all three of the houses on Conch Street.
Role in episode
SpongeBob and Patrick create the Bubble Zoo to cope with getting kicked out of the Bikini Bottom Zoo. All goes well until Squidward unintentionally provokes a rhinoceros, promoting the animals to break out of the zoo and start attacking Bikini Bottom.
It is the second location in the show made entirely of bubbles, the first being Bubbletown.