The Desert is one of two outdoor areas of Strangetown in The Sims 2, the other being the Town Square. Being in the desert causes sims sanity to decrease, therefore spending too long in the desert can be bad. It is particularly recognisable due to the giant red rocks that are around the edge.
The Metal Detector can be used to find objects in the Desert including Nuclear Fuel Rods, Alien Ship Parts, Metal Bars and Mummified Aliens. Alien invasions can also happen in the Desert, where they will generally have abducted a hotel guest.
The Desert is also where guests' missing objects go, or stolen goods. It is unknown how far the Desert continues for, but your sim can only travel out a certain distance. After a while, a river of green ooze becomes visible, which could be toxic waste or even discoloured water, however this is unlikely.