Knuckles has sworn his life to guarding the Master Emerald, a mysterious jewel Knuckles knows very little about. We learn a bit of the Emerald's history in Sonic Adventure.
Knuckles, Tails, and Big have visions of the past, telling the story of Tikal, an Echidna who was in contact with the Master Emerald. Individually, what they see doesn't make sense, but when you put their parts together, an interesting story is formed.
Tikal befriended Chaos and creatures called Chao, who were guarding the Master and Chaos Emeralds. She grew an attachment to the Chao, and played with and cared for them daily. One day, her father found out about the Chao and the Emeralds, and decided to use the power of the Emeralds himself. We don't know exactly why he wanted their power, or what he intended to do with them, but he tried to steal them, and got stopped by Chaos. Chaos absorbed all of the Chaos Emeralds and became Perfect Chaos. Naturally, chaos ensued. (See what I did there? Haha.)
Desperate to save the remainder her clan after Chaos' destruction, Tikal prayed to the Master Emerald, and begged it to seal Chaos inside of it. The Master Emerald did, and in the process, sealed Tikal inside as well. A series of events happened after, and probably because the Master Emerald sealed Tikal and Chaos inside. The most important is the Floating Island rose to the sky.
Sometime after these events, the Chao stopped guarding the Master Emerald, and the Emerald became the responsibility of the Echidnas. They wanted to guard it to ensure that Chaos would never escape, but their purpose for guarding it got lost through time. Knuckles, the Emerald's current guardian, has no idea why he is guarding it.
The Emerald shatteres in Sonic Adventure, and Tikal and Chaos are released. Oh noes.