The Lake of Avalon is the the home of the immortal Sidhe. It appears to be accessible, albeit only with powerful magic that may well be beyond the abilities of human sorcerers. This lake is the only gateway to the fallen other than the Pool of Nemhain, and it is also where Lancelot Freya, and Elyan rest.
A Sidhe elder implanted a Sidhe into the infant Princess Elena, creating a changeling. The faerie would have possessed Elena in 20 years time, turning her into a Sidhe, when she would have married Arthur Pendragon (The Changeling).
When the Sidhe named Aulfric killed another immortal being, he was exiled from Avalon by the Sidhe elder with his daughter Sophia in human bodies (mortal shells). To re-open gateway between Albion and Avalon they needed the soul of a mortal Prince to offer to the elders. They went to Camelot in the name of Tír-Mòr and enchanted Prince Arthur, and took him to the lake and attempted to sacrifice him, but their plan was thwarted by Merlin (The Gates of Avalon).
When the Great Dragon told Merlin to put the powerful sword begotten into his breath in a place where no mortal man could find it, he went to the Lake of Avalon and threw it into its depths (Excalibur).
When Merlin's love, Freya, died from her wounds, the young warlock put her body in a boat and floated it on the lake's waters. He casted a spell, setting the boat on fire. As she was dying in his arms, Freya swore to Merlin that she would repay him. When the druid girl died, she was made the Lady of the Lake (The Lady of the Lake). Later, when Albion was in great danger and all seemed lost, Freya's spirit appeared to him in the pool of water that was created when Merlin accidently smashed the vial of water from the Lake of Avalon that was given to him by the Fisher King . She then returned Excalibur to Merlin so he could defeat Morgana, and save Camelot.
Lord Godwyn and his daughter Elena paid a visit to Camelot, with Lord Godwyn and Uther intending to unite their kingdoms by arranging a marriage between Arthur and Elena. Elena's maid, Grunhilda was a pixie, and she was the servant to the Sidhe elder who exiled Aulfric and Sophia. They were working together to allow the Sidhe that possessed Elena to take her over completely so there would be a Sidhe queen. Fortunately, their plan was thwarted by Merlin and Gaius, and Arthur and Princess Elena called off the wedding when they both admitted that neither of them had feelings for the other (The Changeling).
When Morgause made Cenred's army immortal they became the living dead. Morgause then took charge of the immortal army and conquered Camelot and Morgana was crowned queen. Merlin used the water from the Lake of Avalon that the Fisher King gave to him to contact his former lover, Freya. She told him to meet her at the Lake, where she will hand him Excalibur, which he threw in earlier. With Excalibur he has the power to save Albion (The Coming of Arthur).
When the Shade of Lancelot was forced by Morgana to kill himself, King Arthur ordered Merlin to give the knight a proper burial. Merlin took him to the Lake of Avalon, where he used magic to free his tormented soul. Lancelot was revived for a short time, during which he thanked Merlin, but he soon died. Then Merlin pushed the boat in which he had placed Lancelot's body into the middle of the Lake and used his magic to set it alight (Lancelot du Lac).
In the legend
Avalon is classically portrayed as an island. Known as the "Isle of the Blessed," it is first mentioned in the 1136 work of Geoffrey of Monmouth (not to be confused with Geoffrey of Monmouth), Historia Regum Britanniae as the island where Excalibur was forged, and where Arthur was later taken to recover from the wounds he suffered in the Battle of Camlann. In the 1150 work Vita Merlini, Geoffrey describes Avalon as the home of nine sisters, the chief of whom was the enchantress Morgana.
Avalon is the anglicisation of mediaeval Welsh word "Annwn" (pronounced an'oon), the Otherworld of Welsh mythology. The Otherworld was where the Fairies (the Sidhe, as they were known in Ireland—Twyleth Teg as they were called in Wales) held court, and was where warriors went when they died. The Celts believed in the practise of reincarnation or transmigration of the soul; you would get a new life in another body after death.
By 1190, Avalon had become associated with Glastonbury, and particularly Glastonbury Tor – which was, at one time, a legitimate island surrounded by marshes – when monks at Glastonbury Abbey claimed to have found the bones of King Arthur and Queen Guinevere. This discovery has since been proven a hoax, however Glastonbury Tor remains of superstitious significance to some Neopagans and the local community.