The Crystal Palace is the main setting in Barbie Fairytopia: Magic of the Rainbow. It is the home of The Enchantress and it's possible that some of the Guardians live there as well.
Story
The Crystal Palace is where Elina, Sunburst, Glee, Lumina, Shimmer, Linden and Faban perform The Flight of Spring. It is also used as a school for the Guardian apprentices.
At the end of the movie, the fairies gather in front of The Enchantress and the Guardians in the Crystal Palace. They are all told that they have graduated, quite deserving. They receive special necklaces and it is seen that Sunburst's is a sun and Lumina's is a moon, so they could resemble what type of fairy they are.