The Sunken Country is seen by Kino and Hermes when the maid takes them to see "something wonderful and rare" in the forest.
The country is situated in a narrow valley formed by a glacier, and submerged in water. With the right conditions, a network of roads, houses, apartments and remains of factories can be seen. Tall and thick walls had been built to protect the sides of the country unprotected by the valley's steep cliff walls.
The country was once torn between civil strife - the two races that resided in the country were constantly fighting. Political confrontations resulted in death, but despite this, the citizens stayed, either hoping that it would one day be resolved, or knowing that there was nowhere else to go.
One of the people who once lived in this country was the doctor, who was a researcher of mechanical engineering. She was injured when her home was attacked by terrorists, and was saved by the mechanical dolls she created.
The civil war escalated to the point where the majority of the citizens were wiped out, and the survivors fled the country. The dolls took her out of the country and into the house in the forest, submerging the country in attempts to prevent the maid from remembering her past.
Upon Kino's departure of the forest, the three dolls choose to submerge themselves into the lake.