The courtyard is an area in the Observatory. It is just behind the door next to the chest in the living area. At the entrance are two sets of stairs; one goes up to the roof while the other goes down to the cellar. In the courtyard there is a small waterfall.
During the day, there are some birds which will be fly away if you approach them. Sometimes these birds will leave a common item when they leave. It is usually just a dryad berry, but occasionally they will leave something else like crystal ore. Sometimes the item left is broken.
During the night there will be fireflies flying around near the waterfall. Elena will often be found here around 19:00-20:00, watching the fireflies.