Ariel's Secret Grotto is a special place where Ariel keeps her vast treasure trove of human objects, antiques, and artifacts that she has collected throughout her childhood. Each one has a special place in Ariel's heart.
It is a large cave that has a large round stone covering the entrance. Inside there are hollowed out shelves where she stores and displays her discoveries.
After finding unusual objects throughout exploring places like sunken ships, caves and even sometimes above the surface, she puts them in a small pink shoulder bag and takes them back to store in her grotto.
Ariel has collected many things, each representing a special memory, adventure, all to remember the good times. She calls them her gadgets, gizmos, whosits, wotsits and thingymebobs.
She had two collections stored there: The first one was started by her, after she learned to not be terrified of humans in the TV series. She was forced to destroy it after Ursula cursed the collection to attack Atlantica.
The second one was started at some point between the TV series and the film. It ended up being accidentally discovered by Sebastian, who was keeping a watch on her at the time and then destroyed by King Triton when he was angry with Ariel upon learning that she rescued and fell in love with a human, especially when he saw she had a statue of him there as well. However, he becomes horrified and regrets his actions, leaving a weeping Ariel on her ruined grotto in shame. He later returns to find Ariel gone to search of Ursula the sea witch and orders a search for her to apologize at what he had done. Later, after Ursula turned Ariel into a human for three days, Minako, along with Ami, Rei and Makoto at Usagi's request to undo Triton's doing, uses the Moonstone to restore all of the collection in the grotto as she's undone Triton's actions.
Its reappearance in the film's sequel implies that either Triton rebuilt it or that not all of the collection in the grotto was destroyed. It was revealed that the Moonstone has been used by Minako to restore the collection. The latter at least must be true, for one of Ariel's found paintings, Georges de la Tour's Penitent Magdalen and the Smoking Flame, is currently in a Los Angeles art gallery.