The Skylander Games are the final test of prowess to Skylander Cadets in the Skylanders Academy television show, before they can become fully fledged Skylanders and written into The Book of Skylanders. In it, the cadets face a group of foes and hazards in an arena, and their graduation depends in their peformance.
The show starts right before that year's Skylander Games, in which Spyro, Stealth Elf, Eruptor, Hex and Bad Breath participate and fight, in various waves, a group of Troll robots and flaming arrow hazards, a battle using a SuperCharger vehicle, and a battle against a hologram of Kaos.
Only Stealth Elf, Eruptor and Bad Breath graduate at first, but the arena was attacked by Kaos, who sucessfully stole and froze The Book of Skylanders. When Spyro was the only one left to defend the Academy and its heroes, he was eventually graduated as well for his efforts.
In My Way or the Sky Way, the arena the Games take place is also shown to be where the Skylanders store and use vehicles.