Light Chaos eating a fruit
When you start Chao World for the first time you will have access to two doors and the teleporter. The door straight ahead is the Neutral Chao Garden, and the other door leads to Black Market, Kindergarten, the Doctor and the Name Rater.
Black Market is where you can buy equipment for your Chao such as seeds, hats and new coloured Chao eggs. More items will be available as you gain more emblems in the game. Around 140 emblems should open up pretty much everything for you (although you need the full 180 to see the shiny black Chao egg). Remember that the Black Market changes every few minutes, so if you don't like what's available you can go and do a level in the game, then come back for a different selection.
Kindergarten is where you can teach your Chao skills such as dancing, drawing, singing or playing a musical instrument. Drawing and singing alone have five levels of skill so you can keep taking your Chao back to learn more; the other lessons are one-off deals.
The Doctor is more useful than he looks. If you take your Chao to see him you can see the Chao's stats. This is the only way to find out what grades a Chao has. Also, if your Chao is sick, the Doctor can cure it, but sicknesses are very rare.
Finally, the Name Rater is the way to give your Chao a name. If you don't like the pre-selected names, keep selecting "No" until she asks "Do you want to name Chao yourself?"
Each Garden contains two Chao eggs. Don't worry if your Chao die - you can buy more Chao eggs from Black Market, or if all Chao die the garden will be reset with two Chao eggs as it was to start with.
There are several ways to hatch Chao. On Dreamcast the way a Chao was hatched would determine its face, but on Gamecube faces are random or inherited and hatching methods do not affect the Chao. You can pick the egg up and rock it gently for around 3-5 seconds, let it hatch on its own, or throw it against the wall to break it open.
Shake a fruit down from the trees and give it to your Chao. If the Chao throws the food away, he isn't hungry, or may just be fussy. Pick it up and give it back to him until he eats it all. Chao cannot be overfed and every fruit they finish adds four points to the Stamina bar. Some shop-bought fruits like Strong Fruit add five.
Light Chaos eating a fruit
(NB: the Apple and Watermelon are not food items, your Chao will wear them on his head. This is a waste of rings unless you like the look; it's intended for Chao Karate, but while it increases the Chao's defence, he will lose speed)
Collect animals and Chaos Drives in game and bring them to your Chao. You can take ten items at a time (or for serious Chao farmers, see item trick). Chaos drives add between 2 and 3 points to the stat bar; animals affect stats in various ways and may reduce some stats. A stat cannot go below its current level, however.
There are four classes of Chaos Drive. Yellow improves Swim, Purple improves Fly, Green improves Run, and Red improves Power. This also holds true for the animals - notice the coloured background on the animal's icon. Animals have three other colour classes. Blue raises all stats a little but, more importantly, also increases Intelligence. Gold raises all stats noticeably more, as well as Luck. Black is the ghost class and has some interesting effects on Chao's appearance.
Yellow: Seal, Sea Otter, Penguin
Purple: Condor, Parrot, Peacock
Green: Boar, Cheetah, Rabbit
Red: Tiger, Gorilla, Bear
Blue: Sheep, Skunk, Raccoon
Gold: Dragon, Unicorn, Phoenix
Black: Skeleton Dog, Half-Fish, Bat
A Chao will evolve according to which of the four basic classes of item you give him. If you want a Running Chao, give him green items only. Blue, Gold and Black items will affect your Chao randomly.
Animals also teach the Chao behaviours. For example, a skunk will make him fart, and a dragon will make him breathe fire. (Be careful with this one, he can hurt other Chao!)
Once a Chao's stat has raised up a bit, he'll act differently. When he has a hundred points in Run he'll stop crawling about and get up on his feet; Chao with high Run will sprint about the garden. When he has a few levels in Swim, he'll not drown in the pool any more. And when he has enough Fly, he might just take off now and again!
When your Chao hatches he is a baby. He's small, with low stats, and cannot breed. Give the Chao items and feed him a lot and soon you will see changes in his appearance. The colour and head shape will change depending on how the Chao is going to evolve.
If the baby Chao is turning white with two little bobbles on his head, he's going to be a Hero Chao. Look after him with Hero characters for this effect (and to unlock the Hero Garden). If he is turning black and looks like a little imp, he's going to be a Dark Chao. Look after him with Dark characters for this effect (and to unlock the Dark Garden). And if you can keep him balanced between the two extremes, he'll evolve Neutral. Every time the Chao makes a heart-shape his alignment shifts a little bit, so petting him and giving him food is recommended. I don't recommend you beat your Chao - it's heart-rending when they cry. ;_;
Monocha was hurt...
After about an hour (or less if you feed him lots) the Chao will go into a cocoon and come out looking very different! Congratulations - your Chao has evolved!
When your Chao has a decent amount of stats, enter him in the races and see how he does! I recommend about 300-400 in all stats to clear the Beginner races, and then just get him as high as you can to beat the Jewel and alignment cups. Don't neglect stamina, which you get from feeding the Chao.
When the race starts, you can press A to cheer on your Chao. This will give him a burst of speed but eats up his stamina. If stamina runs out he'll be going at half speed for the rest of the race.
If a Chao wins the last race in a class, he'll get a new behaviour. From the beginner class you get two very important behaviours: the shovel and the watering can. This is the only way you can plant seeds from the shop. When your Chao has those two behaviours, give him the seed and he'll take care of things.
Hero and Dark cups are opened when a Chao evolves to be Hero or Dark. The Hero, Dark and Challenge Cups give special items. Not only the Chao who raced but every Chao can use these items. From the Challenge Cup you get a ball, jack-in-the-box and television for the Neutral Garden. From the Hero Cup you get a ball and rocking horse, and from the Dark Cup you get a ball and radio. Once you get the ball, try pushing it about near Chao. Some of them might run up to chase it, and if one Chao does others will be sure to follow!
Metallic black True NiGHTS
Chao Karate is new for Gamecube. It doesn't give you anything for completing it (except emblems) but it is the coolest and funniest thing I have ever seen.
Heart-shapes are good, the usual bobble/spikeball/halo and exclamation mark are neutral, and a swirl is bad.
If your Chao lies on the ground and throws a tantrum, he's hungry. Give him a fruit and watch as he snarfs it down! Try to keep Chao well fed.
If your Chao is standing up and crying streams of tears, you hurt him! Or you took his food away while he was eating it. They hate that. Keep petting your Chao until he makes a heart-shape, then pet him some more.
If your Chao is lying down with his eyes closed, he's sleeping. Do not wake him, he will be tired and make sleepy eyes and a swirl. Let the Chao wake up on his own; he won't sleep for long anyway. Some Chao snore...
The Chao will also make a swirl when he trips, or when surprised by the jack-in-the-box, but only you can hurt your Chao. He will come to no harm in the garden naturally.
If you hear "Abuu-abuu", a Chao that can't swim has fallen in the pool. It's no big deal - let him find his own way to the edge, or fish him out yourself if you're kind-hearted. You may find that the Chao just jumps straight in again, though.
If a Chao bows and says "Hiii!" ("Ohayo", I think) when your character is nearby, or strikes a pose with one arm in the air, the Chao likes your character. If the Chao goes "Beah!" or struggles when picked up, he dislikes your character. You can make him like you by petting or feeding him, or dislike you by hitting him or taking food away from him. Also, Hero Chao, if raised solely by a Hero, may dislike Dark characters naturally, and the same for Dark Chao with Hero characters.
If your Chao is sitting down with a heart-shape and a ring of flowers, he's displaying for a mate. For two Chao to mate successfully they must like each other (Chao raised together have a better chance of breeding)... or you could just give the other Chao a heart fruit. If two Chao are displaying, put them together and they will always mate, even if they hate each other normally. That is the power of lust.
Pearl True NiGHTS ready to mate
Odd behaviour can mean that your Chao has a sickness. These are rare but don't discount them. The three I have seen personally are headache (swirly eyes), hiccups ("trip" noise while the Chao is standing) and sneezing (makes >____< face repeatedly). If a Chao is sick, take him to the doctor to cure him.
That is everything you need to know to raise happy healthy Chao, win races and get the Chao emblems in Sonic Adventure 2 Battle. Do you want to know more?