Chao

A Chao (pronounced "chow", singular and plural form Chao) is a baby-like lifeform found in Chao gardens. They can be raised by people. Chao are somewhat complex, responding to stimuli, they have moods, they require food, and they can be loving or fearful.

Life cycle
Chao start life in an egg state. The eggs of a common Chao are white with a yellow splotch on the top and blue freckles. When they hatch, they can be trained to have different attributes and emotional states. The Chao can also favor "speed", "flight" and "power" sides, depending on the traits of the person they're exposed to the most. (StH: #173)

When evolving, they go into a cocoon state, which is blue, yellow and shaped like a Chao's head. When they come out of this cocoon the Chao is an adult. (StH: #173)

Evolution
After a while Chao create a cocoon and evolve into a more mature form. It will mature into a form that features both its highest leveled stat (running, swimming, power, flying or normal) and its alignment. During this evolution, a Chao raises one grade up in the level of its type. (StH: #173)

Alignment is determined by how the Chao was treated before its evolution. Petting, holding, or cuddling a Chao with a character makes the Chao favor the character's alignment. Attacking, throwing, stepping on a Chao, or taking its food while it is eating makes it favor the opposite alignment of the character. Every three times that a heart appears above a Chao's head and replaces the standard emotion, the Chao darkens or lightens a shade, a darker shade coinciding with becoming a Dark Chao, and vice versa. A Chao's physical appearance is the chief indicator in understanding the alignment of a Chao. They are colored green and blue. Neutral chao are created by balancing contact by both Hero and Dark characters. They are able to look like a lot of different characters. (StH: #173)

Chao Gardens
A Chao garden is simply a forest area with plenty of water or a small lake.