It's water from the fountain. It's was liquid before Kate arrived. They turned into tiny drops after the fountain exploded when Ava appeared in the Big City. The magic drops are hidden in many areas, like in trees. Each time it's found it give a picture of Ava at the or bottom of the Fountain and sometimes some parts are missing (they didn't find all of the drops) sometimes it shows Ava's current location, sometimes there's nothing because Ava was kidnapped by the Pet Buster or if she is in some other danger. In "The Final Game (part 2)" they found all the Magic drops and there was a complete picture of Ava and after the Friendship Ceremony and the Magic fountain had water again.
- It seems that LEGO based Chi off of the magic drop