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The game takes place exclusively within the City of Soleanna and surrounding area. In town stages, you can talk to NPCs, take Town Missions, buy upgrades using rings collected through Action Stages or Town Missions, and further the game's plot by finding entrances to Action Stages. There are three sections to Soleanna:

Soleanna Castle Town
The starting area for Sonic. Castle Town contains Altar where the citizens of Soleanna pray to the Sun God, Solaris. Its appearance is modeled after Venice, Italy, with similar water ways and gondolas.
Soleanna New City
The starting area for Shadow. The modern portion of Soleanna, with tall buildings, a port, and a train station.
Soleanna Forest
The starting area for Silver. A giant forest near both New City and Castle Town. This location also contains a gigantic valley and a swampy jungle.