The Twilight Grove sits in the middle of Duskwood. It has a surprisingly night elven feel to it, and could very well be sitting dead in the middle of Ashenvale as opposed to in the middle of human lands. It is home to one of the four portals to the Emerald Dream guarded by the green dragons of Ysera's flight. The great tree was planted by followers of Fandral Staghelm from one of Nordrassil's branches in order to stem the tide of saronite seeping up from the land.
The Dream Portal becomes active for druids, providing access to the Emerald Dreamway.
The druid hero meets up with Valorn Stillbough and Belysra Starbreeze, sent by Tyrande Whisperwind, at the moonwell here to acquire the Scythe of Elune. A Dark Rider named Ariden ambushes the meeting, killing Valorn and making off with the Scythe, the druid following in close pursuit.
When the Dreamway falls to the Nightmare, Lumbering Mindgorgers begin pouring out of the portal, threatening the surrounding area. Heroes fighting the Dragons of Nightmare will come here to defeat these aberrations.
Twilight Grove digsite
Note that the digsite map seems to show that the digsite covers only about 2/3 of the Twilight Grove, the remaining area is largely impassable.